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  CSPAN    Capitol Hill Hearings    News/Business.  

    November 13, 2012
    8:00 - 12:59am EST  

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>> he certainly is. >> do you want to talk about that $340 billion as a resumption of payments. he might have to get out and entitlement programs as part of the grand bargain. >> i will not read out the details of a meeting that was still taking place before i came out here. there are two aspects of savings on our health care programs. the initial significant savings was a focus of debate that were achieved through the affordable care act. the $340 billion in additional savings. that is a substantial amount of money. but the president said on friday is the position he will take when he enters the room with
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congressional leaders this coming friday. he has a specific plan that takes a balanced approach. he believes that his plan is a good guide to how we can achieve a broader compromise. he also said that he is not wedded to every aspect of his plan. in order to reach an agreement everyone needs to compromise. compromise should not be a dirty word in washington. that is another message of the election. the american people want action, not political posturing, it will in the decisions made here. it is fair to say that the president believes that he is not looking to boxed himself or other people's ideas out as we
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approached the conversation that will begin on friday. >> will they have to give up more than they would like to attack the president has made clear that everyone for of this process the whole point of compromise is that no one gets to get achieves their maximalist position. that is the principal the president has based his own proposals on. look at the programs that the president has already cut through legislation he signed into law. look at the savings he is willing to enact as part of his plan. it demonstrates a willingness to give so that you can meet your negotiating partner somewhere in
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the middle and reach a deal. >> do you have specifics? >> i do not have pacific's -- specifics. i appreciate that but i do not have pacific specifics . . >> what will the plans before the rest of the year? >> these calls that i read at the rest of the visit at the top was in response to congratulate his reelection. werere all -- they w brief. >> can you follow-up on the compromise? is the president willing to compromise on his insistence that the bush tax cuts are not extended for the top income bracket? >> the president is committed
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to extending and believes it is the right to petition for extending it to the 98% of people in 97% of the businesses. the senate passeed it. washington can work on the people's behalf and address some of the problems that face them with these deadlines. he would not sign a bill that extends the bush era tax cuts for the top 2%. that has long been his position. it will not change. he would not sign such a bill. he also believes as part of the approach he has long taken an the egos of balance he takes to
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these issues that he does not accept that you need to raise taxes on those making under 200 to $2,000. a balanced approach requires substantial revenues. those in revenues me to come from those who can afford it -- the wealthiest among us. as demonstrated in his plan you heard him talk about during his campaign. the clinton error rates in place in the 1990's far from hindering economic growth or part of an economic approach past 1993 that led to the longest peacetime expansion in our lifetimes that led to the creation of more than 23 million jobs. it also led to the creation of thousands of millionaires to boot. there are different ways to
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approach this. the president will not sign a bill that extends the bush era tax cuts for the wealthiest americans. it is not good policy. >> even if the wealthiest and the pay more in taxes? >> you are dealing with hypothetical about plans that do not exist. the president will not sign a bill that extends tax cuts for the top 2%. he has lon supportg and proposed tax reform both individual and corporate. he believes that is important. he was clear during the campaign and has been clear in other thing we knowe about the clinton era rates for the top earners is that they were effective not just in insuring that the wealthiest paid their fair share but as part of an approach that gilded
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economic expected expansion, job expansion, and wealth expansion. that is the thinking he brings in to this. i will not negotiate the specifics before the leaders have a chance to sit down. >> with the recognition of general petraeus -- has the resignation of general petraeus,? no,now, these were no -- these were conversations about the president's re-election? >> what was his message going in? there was concern that he would over compromise. >> i would say several things about the meeting that he is having this week including the one that concluded earlier. ideas.s to hear others'
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he wants to listen. in terms of the approach that he is taking it is very much what you heard him express on friday. he is committed to a balanced approach. he will not sign an extension of the high income tax cuts of the bush era. he believes congress should act immediately to extend the tax cuts for 98% of the american people so that we do not find ourselves in a situation where everyone in america has surtaxes go up and the reason is because the house wanted everyone's taxes to go up rather than accept that the top 2% of the american people should not have their -- should have their taxes gilbert up. -- go up. he is more interested in hearing about the ideas and concerns the
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half. i do not have a read out for you. >> during the previous inning the ministry is have ask for a resignation. is the process had the stage here at all? >> i do not have any information about personal decisions. >> that is not a personal precision per se. >> i am not aware of a process in place. >> what was the time line in terms of when the white house learned about the general allan investigation? >> the the first became aware on friday after the department of justice and notified white house counsel that there may be an issue associated with general
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allan's nomination which is why the department of justice thought it was appropriate to notify the white house. the president was notified monday evening that secretary panetta referred it to the defense department's ig. the white house learned very broadly that there may be an entrant -- issue associated with general allan's nomination. i would refer you to the fbi in terms of the process seized they they follow. the white house counsel was informed and the white house counsel brought that to the president. on sunday, -- on monday evening, the president was notified that secretary panetta had referred the matter to ig. >> but time is a news conference? >> i do not have a time for you
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yet. >> did the fbi uses as part of a background check on alan? >> i would -- we do not discuss vetting issues. >> that is part of the confirmation process. >> it is not part of the confirmation process. the department of justice notified the white house counsel that there may be an issue associated with general allen's nomination. was nominated to be supreme allied commander. the hearing was pending. >> who is doing this background check? >> i would refer you to justice and the fbi for far from checks? >> has this been distracting on
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the president on other important matters? >> this in ballston percent -- is embossed important personnel. >> how much time does it take? >> i do not have the time. who knows? this was not a great expanse of time. the president is having meetings today and will have other meetings this week focused on the path we need to take to grow our economy and create jobs and the decisions we have to make in the coming weeks to help that come about. it is part of governing that these issues arise and we have
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to deal with them. >> this is a question on the fiscal cliff. you say he will not sign any bill that extends the bush cuts. it is highly unlikely that he would get a bill like that. how open is he to the notion that -- in terms of going forward? is he willing them out completely? >> i am giving you a pretty good printers on the president's thinking going into the process that he said it begins with the specific proposal he has before congress, a plan that achieves balance and that allows us to continue to invest in important areas of the economy. he has not been wedded to every detail of that plan. i will not negotiate
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hypothetical details. i was side speaker banner and say i am not in the position of boxing ourselves and others. he looks forward to the meeting with leaders in congress. and as clear principles fam belief that we can reach a compromise is comparable. it would allow us to address the fiscal cliff challenges in the economic and fiscal challenges we face as a nation. >> is he just taking principles then? will he have any concrete to put on the table? negotiators have to know each other halfway. does congress have to meet him halfway? >> i appreciate the projection that he does not have a plan he is bringing to the table.
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it is the most specific plan there is. it has been on the table for some time. that is what he believes the right approach. he is not wedded to every detail. there is a challenge chair. for anyone who put forward alternative approaches to prove that the numbers add up. one thing we know about the president's plan is that the numbers add up. over the course of this past year, we have on some credibility on the fact that we know our in arithmetic. you need a balanced approach that achieves a level of revenue, entitlement savings, reductions of spending, and if you do that in you get to that $4 trillion mark, you will have effect our overall
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economic prospects. he will send a signal to the world that we are getting our economic house in order. we are doing it in a way that does not harm economic growth. it does not contract job creation. it boosts job creation. we do not make these decisions in a vacuum. cutting the deficit and reducing our debt are not goals to pursue by themselves. if done right, the healthy economy. >> has the president been blindsided by information reaching him too slowly? has he ever felt that information was too slowly to his desk? >> i have not have had that broad conversation with him. >> while she does not serve to
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stirred into a second term, she would be willing to stay on. does that give the president flexibility to move in a deliberate manner in that particular personal decision? is that something that may allow him not to shoot for the january 22 date? >> without speaking for secretary clinton or any member of the cabinet, the president appreciates the service of every member of his cabinet. decisions like that reflect the kind of service that these individuals have given over these past four years. i think the president believes secretary clinton has done a
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superb job. he values her service and advice. he will be grateful for her service up until the day she decides to >> leave greater than to leave? >> if she offers her service, would it be helpful? >> you can be the judge of that. we have a number of issues that we are contending with. the president will engage in a thoughtful process and make personal decisions that need to be made in a timely manner. and when we have decisions to announce, we will announce them. he has a team. a team that has served him and the nation well. he will continue to work with that team. >> [indiscernible]
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would it be ok if at some point the same sequence of events that he only find out just moments before he has to lose his senior member? >> that is an interesting question. if there is a hypothetical of of there, i will not -- it is a unique situation. as far as the protocols themselves and how they were adopted and followed, i would have to refer you to the fbi and justice. >> does the president feel that he was ably served by the fbi protocol said gave him only a day's notice? >> the president made a decision based on his conversation with general petraeus. general petraeus offered his resignation and said he did not
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believe he could continue to serve as head of the agency. the president thought about it and agreed with that. i do not think that is affected by the time frame here. this was a meeting the president had and a decision that came out of that meeting. >> given how partisan washington has been, the fact the general petraeus was a republican, it makes its -- does it make it easier for the administration to do with this fallout politically? >> general petraeus served his country. he did not serve a party. that is one of the great things about the military.
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the president is an enormously appreciative of the service. thank you all. >> [indiscernible] >> he witnessed the formation of a new band. they will meet on international development issues with other members of the white house but not the president. i am not sure why he was here. he is always welcome. take care. >> the miami book fair international is live this weekend on both tv with two days of nonfiction books, author panels, interviews, and your
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calls, interviews, and tweets. we will look at several authors. our live coverage starts saturday morning at 10:00 eastern and on sunday at noon on c-span two book to be. join us on line with author chats on facebook. visit facebook.com/booktv. >> congress return today for the first time since last week's elections. nancy pelosi holds a news conference with a newly elected democratic members of the 130th congress. senate leaders talk about the upcoming negotiations over the so-called fiscal cliff. that is followed by more on the potential tax hikes and spending .an hollen va = =
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we held a briefing with newly elected democrats. patrick murphy who defeated alan webb spoke to the new members who take office early next year when the 130 congress convenes. this is 20 minutes.
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>> at length of time it took for our new members to come onto the platform here is music to my ears into your ears as well. they say that a picture is worth 1000 words. the picture that you see before you is worth millions of votes. millions of aspirations of the american people. problem solvers to come to washington to get the job done. today we welcome our democratic freshmen to washington. they are extraordinary leaders who will make our house democratic caucus the first in history to have a majority of
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women and minorities in the caucus. you can applaud that. before you you see a broad coalition of people who stand ready to work with president obama to move america forward. of the 200 democratic members we welcome 61 women, we welcome 43 african-american's, 26 hispanics, 11 asian-americans and others. that is what our ranks look like. the diversity of our caucus celebrate the strength of our nation. this caucus is a picture of
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america. all of our democratic colleagues will play a critical role in support of president obama. each of them come here as an independent representative of his or her district. i tell them all the time -- your job description in your job title are one in the same -- representative. we need the diversity of your thinking to strengthen our policy. we will work with the president to grow the economy, shrinking the knowledge class, which strengthened the middle class, and they have come just in time to do that. house democrats are ready to work with the president, our senate colleagues across the aisle for certainty for our economy and middle-class. with our newly elected members
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and the democratic caucus we will work to reignite the american dream. to build opportunity for people who work hard, played by the rules, take responsibility. central to all of that is strengthening our small businesses, our entrepreneurs hips in america and having a rival middle-class. we have for to do. we are ready to do that work. since i began speaking, where members have come in. come on in. chilean from california. we are very proud of all of our members. they could not celebrate this success without the leadership of steve israel, the chair. when i asked him to take this responsibility to serve our country and colleagues, i i said
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to all of you that he is a gold standard of a member of congress. he knows the policy. he cares about american people. that drives him to do the politics to increase our numbers to pass legislation that takes us for to improve the lives of americans. before i bring him on, i wanted to have a representative of the freshman class to speak on behalf of the class. i am very honored to welcome a fighter for the middle class, a real representative of his generation, congressman alec patrick murphy. his election is a cuase for celebration. his election sends the message to a new generation of americans that their voices will be heard
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at the table. congratulations, congressman a -elect, patch of mercy. -- patrick murphy. >> thank you for your leadership and for being here with us. thank you for your support. my name is patrick murphy from florida district 18. the youngest member of congress. i did defeatists someone you may know -- a guy named alan west. with the help of a lot of people behind me. thank you for your support. throughout this campaign the one message i heard was the need for bipartisanship to reach across the aisle. that is what we need to do. we have to put our country first. what i talked about with my colleagues is problem solvers,
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doing what is best for americans. to what is best for all americans. that is what we will do. that is what our country needs. that is what i plan on doing. thank you all very much. i appreciate it. >> without further ado, still working in to whatever comes next, the great chairman of the democratic congressional trepang committee. a leader in the congress while he was going to the work he was doing. he had to meet the needs. he did faithfully in first of his constituents who were under siege from hurricane sandy. he has his priorities in order. he knows his policy. he loves his american people. he is very patriotic. he is very good at politics. >> thank you very much. thank you to leader pelosi for
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her tenacity and her unprecedented work ethic. to my new colleagues -- welcome. the leader told me that it would be a labor when. i have enjoyed every day of this job. it says something about our unexpected pickups that you had to use your wide angle lenses to capture the incredible wealth of talent and diversity we have. with the new members, the tea party starts to roll back and problem solving can move forward. that is what this election was about. these leaders wake up every morning not thinking about left or right. they wake up thinking about how to move their communities forward, the country forward, how to solve problems. are may years to have had to balance budgets and the potholes'. they are veterans. they are small business people.
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they are doctors. the message that voters sent due out this country is that they want problem solvers in congress who are focused on priorities, how you rebuild and reignite the middle class. they are not interested in t party ideologies. they are interested in moving this country forward. the leader mentioned this. it is a major take away from this election. these new members reflect the priorities and the diversity and the values of the districts that elected them. the republican caucus if you look at it looks like a rerun of the show "madmen." our caucus looks like america. it looks like congressional districts in america. 61 democratic women, 43 of the congressional black caucus, 23 of the hispanic caucus, the most
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the birse caucus in the history of congress. she said in the story of civilization. because of the addition of women and others, it not only is the most diverse caucus and the history of civilization, it will make us a more civilized caucus with the addition of those to reflect diversity. it is that diversity, problem- solving, which is why we surpassed expectations in this cycle. my counterpart predicted a net gain of 16 seats for the republicans. speaker banner predicted a gain of seats for the republicans. the cook political report said this was a better than expected ninth for house democrats. when everything is tallied up and called we expect that our caucus will have 200 members, a pickup of seven or eight members.
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these democrats defeatist 16 republican incumbents. these democrats defeated 16 republican incumbents. that is not the 40 we defeated back in 2008. that was a watershed election. 49 freshmen members. who they are and what they look like and who they beat is less important than what they stand for. that is what is most important. how we win is less important than why we went. this is what they stand for -- they and we are ready for solutions and not sequestrations. we are ready to seek common ground, hopefully on a higher ground. we are willing to compromise. we are willing to find consensus with republicans. we will work with republicans to open up more small businesses instead of shutting down more planned parenthoods, which is
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what they tried to do. we will work with republicans to balance budgets so long as those budgets are balanced fairly, and the middle class is not asked to be the first and only to sacrifice. we will find a compromise. we are willing to find a compromise with republicans so long as that compromise is fair, balanced, just, and lose this country forward. we are ready for fiscal responsibility and not a fiscal cliff. this election is now over, ladies and chairman, and we, as house democrats, newly elected democrats, and those who are returning, we are ready to govern. the basis of governing effectively is solving problems and standing up for the right priorities. every one of my colleagues and leader's pelosi's colleagues elected in this cycle set that as a goal. they are ready to deliver. thank you very much. i will turn it back to leader pelosi.
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>> we are so proud of steve. although we did win 25 seats. we did not get 25 seats. thank you, steve, for your great leadership and having this configuration. our founders envisioned the house of representatives, which would be a constant reinvigoration of the congress because big have to be elected every two years -- go o the voters every two years. this year, 25% of our caucus is brand new. quite an invigoration. here they are -- the fresh recruits, who among them will lead our nation in what other capacity as well as leader in the house of representatives. we may not have the majority, we may not have the gavel, but we have unity, and with that unity, a consensus built to solve problems to work with president obama, we are ready to work. are we proud of president obama and his wonderful victory? not to get into politics. with that, in case you have any questions -- yes ma'am? >> will you plan to stay on as the leader?
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will you run again? >> let us see. what time is it now? it is 2:00 on tuesday. i will see you right here 10:00 tomorrow morning. while i love you all very dearly, i thought maybe i would talk to my own caucus before i shared that information with you. i will see you 10:00 tomorrow morning. ok? >> i want to get your take on the scandal involving general petraeus. he resigned. general allan has been brought into this scandal. what is your take on the scandal? >> i think there are some answers we have to have about notification to congress. i do not have any reason to think that there are any national security issues at stake in what has transpired. some dishonorable things were done. the honorable thing has to resign and not to go forward.
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>> do you think this should been reported that the congress earlier? >> i do not know. we have to find out who knew what when and why would congress not have known? if it does not involve national security, the notification requirement does not trigger. if it involves poor behavior, then it would have been nice to know before we saw it on tv. >> i know you have met with the acting director of central intelligence. those conversations are proprietary. did you express to him what your concerns were about these notifications? did he reveal anything about where we stand with this? what i am striving for here is -- you want to have some answers, but you also want to put them on notice that we do have a problem with notification, right?
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>> i have no notification if it involves national security. the acting director is talking to the leaders about what has transpired and how we will go forward. it is important to know that this was a personal indiscretion as far as we know. why somebody would be personally indiscrete is their own problem. why they would do it in emails is beyond my imagination, but in any event, the honorable thing was done. the general has resigned. there are questions about timing just as a tradition to notify congress before we see it on tv. if it involves national security, that is a different story. so far, we do not believe that it involves national security. >> did you ask about that again today -- >> you acknowledge that it was private, but you want to know what i asked him? >> you do not have to tell me exactly what he said. >> i have always been a great protector of the practice of congress. one of my fights with the administration for which i have
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taken many hits by all administrations is that the administration always believed that they own intelligence information. we in congress believe that we are the custodians but that we have equal access to that information. you can count on me to protect the congressional prerogatives when it comes to our national security. i do not know if our colleagues want to stay. i know that they have a lot of orientation to do. you are welcome to stay for this. yes, ma'am? >> i want to ask you about the fiscal cliff. >> last question, guys. >> on the fiscal cliff, some of your democratic colleagues have said it would not be the worst thing to go over the cliff. they say that may actually strengthen the president's and democrats' negotiating game. what do you think? is it important to do a deal before the end of the year? >> absolutely. we are here -- i do not know if i speak for everyone here. i think i do. generally, in my caucus, i do not know which democrats you are talking about there. that speculation is not one that is generally shared by our
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leadership on house democratic caucus. we want an agreement. we want one, as mr. israel said, that is fair to middle-class americans. that we need to have growth. put growth on the table. how do we get growth? if we have growth, we can produce revenue. we make decisions about running. we make decisions about cuts to the extent that they promote growth. that is something that we stand ready to support the president and something similar to what he proposed last year. i do not know what his current proposal will be. we will hopefully find that out on friday when we go to the white house. i want you to be disabused of any notion that there is any widespread thought that it would be a good thing for our country for us to go over the cliff. we want an agreement. we want an agreement. i will see you tomorrow at 10:00 or those of you who are interested. see you there?
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>> stay tuned. interest.
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>> on the first day of legislative business since the 2012 election, the senate as
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outlined their party positions on eliminating the fiscal cliff. from the senate floor, this is 20 minutes. >> after our election, i welcome everyone back. the summer was a last break. -- for some it was a nice break, for others it was hard work. we welcome very one back. there will be a roll call votes on the motion proceeding. i ask consent that michelle be granted privileges of the floor. >> without of section. >> for the last year and the
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president has been focused on the difference between republicans and democrats. for the last two years, this congress has not accomplished another -- a enough. it is time to focus on our common purpose. we will all agree that today great challenges facing our country and this congress. those challenges are large. too large to be solved by democrats. two large to be undertaken by republicans. to grave for us to allow political differences to stand in the way of success. on the day gerald ford became president of the u.s. at a time of national turmoil, this is what he said -- there is no way we can go forward except together. no way anyone can win except by serving the people's urgent needs. we cannot afford to go backward.
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we must go forward together. so said gerald ford. that is true today as it was back then. today the american people have many urgent needs. they need more jobs. they need economic certainty. they need opportunity and fairness. it is within our power to quickly address the urgent needs. it is one our power to forge an agreement now to middle-class families who can not afford a tax hike. we will ask the richest, most fortunate among us, pay a little extra to reduce the deficit and secure our economic future. it is in our power to push for an agreement that would protect certain tax deductions for families and businesses struggling. it is an hour powerful to forge
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an agreement to take a balanced approach to reduce spending. we could avert the fiscal cliff for 98% of american families in 97% of small businesses today. the house was considering a senate bill. this congress is one vote away from avoiding the fiscal cliff for middle-class families and small businesses. as bill kristol said this week -- but does have a serious debate. solutions are in our grasp. we have to pull together instead of pulling apart. the hands of the democratic caucus are reaching toward a republican side.
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join us to do the necessary work ahead. americans are tired of politics and vision. they are tired of obstruction and destruction carried the american people want cooperation and reconciliation. i urge my republican colleagues who consider the same strategy of obstruction to turn away from the divisions of the past enjoyed and compromise and consensus. how this congress stills with the challenges ahead will be the test of our character. as individuals and ass a body. some one said -- they spend their time looking forward to the past. we cannot look back. we must show the people the
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challenges we face. the challenges are here. we know the challenges. we see the challenges. we can feel the challenges. there are many reasons why as we wind down this want of congress -- 112th congress. the best illustration of our duty comes from the words of daniel and away. he asked his dad -- why after people are designated as enemy aliens as being put in internment camps why did he and members of his combat team fight heroically the way they did? >asked why he fought. he said many years after the battle ended, wounds had healed that he fought for the children.
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he said he felt for the children. i would say to my colleagues -- i regret and republicans -- we must legislate for our children. they deserve it. we owe them the future. it is time for us to go forward together. go forward now together. as gerald ford said -- show the american people we are equal to the challenges we face. but as a some together. -- let us face them together. >> i want to begin by welcoming all the new members who are here today -- publican and democrat. congratulations on your victories. welcome to the senate. it is not as terrible a job as some say it is. we welcome your ideas, energy, and enthusiasm.
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we wish you every success in your time here. i want to congratulate the president and the vice president on their hard fought victory last week. i like to say a brief word the thanks to our own nominees, governor romney and congressman ryan. they may not have won the race, but htey earned our respect and admiration. they fought valiantly for the cause of limited government, free enterprise, opportunity for all, and a stronger social safety net that is there when people need it most. they fought for the kind of constitutional conservatism americans believe in so very strongly. their lost says nothing to diminish the importance of these
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enduring principles or our commitment to keep fighting for them. we thank them. we thank their families for making the sacrifices in the presidential campaign demands. i want to assure everyone the cause goes on. on ot the task at hand -- in politics, there is always a temptation among those who win office to think they have a mandate to do what they will. it is the important to remember in this case the voters reelected a republican- controlled house last week and a closely divided senate. in a government of three equal branches, that is hardly irrelevant. most people may focus on the white house, but the government is organized no differently today than it was after the republican wave of 2010.
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look out across the heartland and you will see regions of the country wary of the president's vision for the future. the country is sharply divided. about the right path forward. if the president wants to unite america, as he has always claimed to, if he truly realizes that he was elected to represent all of its citizens, not just the ones who voted to give him a second term last tuesday, then he will seek common ground that he largely avoided so strenuously in his first term. that is his task. that is the duty that comes with being president. i hope that in this term he rises to the challenge.
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realize that he is the only man in america who can sign a piece of legislation into law. the only one of the 360 million americans. while voters have given him a second term, they have also given those of us in congress the power and duty to ensure that he uses that power wisely. that is what we intend to do. the campaign is over. the time for slogans and pep rallies has passed. if the president is serious about solving current crises and avoiding future ones, he has to step up and to lead. but maybe clear -- when it comes to the great economic challenges of the moment, saying that you want to have a balanced approach is not a plan. saying people need to pay their fair share is not a plan.
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the tedious repetition of poll- tested code -- talking point is that. the longer the president uses them as a substitute for leadership the more difficult it will be to solve our problems. the time for the president to lead is now. that means offering a concrete plan that takes into account the fact that half of the congress opposes tax hikes. not because we are selfish, not because we are stubborn, but because we know it is the wrong thing to do. we know it will hurt the economy, and we know it will destroy jobs. this is not partisan politics. it is economics. as the president may say -- it is mad. according to a recent independent nonpartisan study, raising tax rates on top earners as the president has proposed
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would destroy over 700,000 jobs. it would throw the economy -- it with the demons to reduce -- it would not do much to reduce the deficit. think about it. the amount of revenue for which they are prepared to push us over the fiscal cliff would not fund the government for a week. but me say that again. the amount of revenue that they are prepared to push us over the cliff over would not fund the government for one week. why would we want to do that? what is the point? to make people feel good about whacking someone else? that is not what we were sent here to do. that is not what the people of kentucky sent me to do. that is not how you set economic
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policy. because it makes you feel good? you set economic policy because it will lead to investment in america. create jobs and give more people an opportunity to lift up themselves. boosting middle class incomes now and ensuring security for the future. hthis is the end of vision that speaker boehner without for the country last week. i cannot think why the present would not embrace it. someone said we should go over the cliff. just go off of the cliff. hope for the best. i do not think that is what the american people had in mind when they went to the polls last week. but they had in mind is that we put the contest of the past two years behind us and work it out. the best way forward in the way
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that will lead to jobs and growth, a smaller deficits, and you were political fights is to keep everyone where they are. figure out a way to avoid the automatic defense cuts scheduled to hit at the end of the year without putting a penny last thing we promised and committed to the entitlement reforms that we all claim we want. a simpler tax code that lowers rates and cuts special interest loopholes would create jobs and result in more revenue without raising anyone's rates. we know this because we have seen it before. it actually works. i do not think washington should get any of that extra revenue. i do not think we need it. not thatn's problem is
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it's taxes are too little but that it spends too much. in a good faith effort to make progress on boosting the economy, republicans have said for more than a year that we are open to new revenue in exchange for meaningful reform to the entitlement programs that so that we can reduce the deficit, protect these programs for today's seniors, and shrink them for future generations. new revenue must be tied to genuine entitlement changes. let's strengthen them for the future and address our long term deficit problems. in other words, if we thought we could make progress in creating more middle-class jobs and address what is by far the single biggest obstacle to fiscal balance -- this is the
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basic outline of a plan. is our seriousness as a party. make no mistake, republicans are offering bipartisan solutions. now it is the president's return. his turn to demonstrate simple, similar seriousness. bring his party to the table and take the lead. we are ready to find common ground. ready to find common ground on revenue. not, as i said, because any of us think the government needs any more of it, but because democrats and the president on down have said they are willing to punish everyone if they do not get it. we are not about to let that happen. we are also not about to further weaken the economy by raising tax rates and hurting jobs. look, this should not be that difficult.
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history gives us two examples of presidents to solve big problems by finding common ground with the other side. ronald reagan did it with a democratic house after a resounding second term victory. as did bill clinton with the republican controlled house and republican controlled senate after a more resounding second term victory then president obama. both examples, both of them, illustrate the rare opportunity that divided government presents. president obama can follow suit or he can take the extremist view that both reagan and clinton rejected by founding his nose at the other side and insisting that if republicans are not willing to do things his way he will not do anything at all. if the president is serious, he will follow the lead of president reagan and clinton. if he is really serious, he will put the campaign rhetoric aside,
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propose a realistic resolution that can pass a republican controlled house and a divided senate, and work to get it done. if the president acts in this spirit, i have no doubt he will have the support of his own party and a willing partner in hours. the american people will criticize of relief knowing not only that we have avoided a crisis, but that washington can feel their interests. unless we act, americans will face a combination of defense cuts and automatic tax hikes that will plunge us into another recession and to undermine and national defence. the looming crisis is made worse by the backdrop of a massive federal debt that will never be able to tackle as long as democrats refuse even the smallest of reforms to strengthen and protect the
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entitlement programs that are driving that bad. that is why republicans have remained strong on this point. any serious solution, any serious solution must include real, real spending cuts and meaningful entitlement reforms to strengthen and protect these programs for future generations. we got into this mess because we promised cuts that never materialized. we could not muster the will to match entitlements with changing demographics of our country. we're not going to get out of it until we are willing to do both and agree to do it together. republicans reached out, made offers beyond a third approach in an effort to attract bipartisan solutions. meanwhile, all we get from democrats are letters saying they will not even consider reforming the very programs that
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lie at the very heart of our fiscal imbalance. instead of showing faith and a willingness to solve the problem, we did the same talking points that we cannot cut our way to prosperity. that may paul well, but it is not a plan. it is a cliche that is meant to prevent a serious proposal from ever taking shape. so how do we get around this failure? it is simple. presidential leadership. let me repeat -- only one person in america out of 306 million americans who can sign something into law. even more importantly, deliver the members of his party to support a deal that he makes. we will riva a plan if the president presents one. we will not -- or we will not get anywhere at all. that is how we get out of a jam. that is what the moment requires. it is the president's move.
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so we can avoid these job killing tax hikes before they strike and replace the defense portion of the so-called sequester with cuts of equal side that both parties agree to during last summer's debt limit negotiations. we can do all of it in the weeks ahead with a promise to do even bigger things next year. that is exactly what we should do. this is one of those moments where the only thing standing between success and failure is presidential leadership. that is why we are calling on the president to seize the moment, seize the moment and do something he has not done before -- but which successful predecessors have so often done before. we call on him to lead, to take the initiative, proposed a plan that is actually designed to succeed. if he does i am confident he will find he has more republican
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friends over here than he thought. i am not asking the president to agree with us on the proper role of government or the dangers of increasing regulations. i am not asking him to adopt our principles. i am simply asking him to respect our principles and not insist that we compromise them. because we want. -- will not. we will be happy to work with him on a plan to avert the coming crisis and lay the groundwork for further successes down the road. let's just put the campaign behind us and get the job done. mr. president, i yield the floor. >> the" ceo cancel -- council is hosting its annual meeting. three panels. first, house budget committee ranking member chris van hollen talks about the plan see endorses in dealing with the
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federal deficit. then, treasury secretary tim geithner talks about the so- called fiscal clef and potential tax hikes and spending cuts. that is followed by kent conrad with negotiations on the fiscal cliff. >> c-span invites middle and high school students to send a message to the president through a short video. let president obama know what is the most important issue peak -- should consider in 2013 for a chance to win the grant -- grand prize of $5,000. open to students grades 6 through 12. the deadline is january 18, 2013. for complete details and rules, go online to studentcam.org./ the "wall street cuts" ceo council is -- wall street journal ceo council is hosting its annual discussion about the so-called fiscal cliff were
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automatic cuts will take place unless congress acts. chris van hollen indorse is a deficit package. this is 30 minutes. >> thank you. it is great to have you here. we have had people for the last 24 hours giving their opinions on the fiscal cliff and the fiscal cliff negotiations and what should happen. we are expecting you now to tell us exactly what is happening. >> listen, i think we all need to accomplish two things as we approach the fiscal cliff. one, do everything we can to avoid it both in terms of the sequester peace and also the tax peace. then create a structure where we can deal with the big issues, the big fiscal challenges over the next 69 months. it will be very useful if we can at least -- six to nine months.
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it will be very useful if we can least agree to a free-market structure. one is to make sure we can -- framework structure. one is to make sure we can accelerate in what has been a slow recovery. at the same time, act now to put our long term deficit on a sustainable downward path. act now on both. by now i mean first avoid the fiscal cliff, and then get into the next six-nine months in a structured way. >> several people have pointed out the democrats have the advantage in the fiscal cliff. is there any possibility you would go over in order to force action if necessary? >> there is no desire to go over the fiscal clef. >> is there a possibility what? >> there is a risk we would go over the fiscal cliff. two parts, as you now -- one is the sequester piece. i believe there is a very decent pass -- chance we can resolve that piece. because there is universal
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agreement there is a bad idea to have these across the board, indiscriminate cuts. look at the amount of deficit savings over a year, you talk about $110 billion, $55 billion defense, $55 billion in non- defense. it seems to come up with an alternative way to achieve that in the budget window. that is one piece. the tax piece gets tougher. we also have the objective of beginning to reduce the deficit in a balanced way. i happen to support the framework of simpson-bowles in terms of their revenues and cut and the ratio of revenues to cuts. if you look at the simpson- bowles framework, their part -- starting point presumes the amount of revenue you would achieve if you allowed the top rate to go back to 39%, the clinton era levels. that is in their base line. then they raise revenue on top
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of that. as we approach this challenge, which is the long-term deficit reduction plan, my view is we should make sure we get that kind of mix of both cuts and revenue. i'm open to look at all different ways of getting there, but it's hard to achieve that result if you boxer soft and. >> what you have heard over -- boxy yourself in. >> what you have heard over the last few days from republicans is a willingness to that tax rates for high income people rise, but to do it with deductions. i saw you quoted in some paper i cannot remember the name of right now this morning saying he won both. you have a republican movement on the tax issue, but do you really have to get both deductions for high-income people and rates for high-income people? >> what we need ultimately is a mix of revenues and cut the you see in simpson-bowles. we should look at tax reform. the issue is how you do tax
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reform in a way that eliminates preferences and other things that we could prune out of the tax code, but also accomplishes the other objective in simpson- bowles,, to achieve deficit reduction in a balanced way. if someone has another idea of how to achieve the total amount of revenue innocence and-bowles that they presume -- cynn√Č simpson-bowles that they presume, i think they have a great from work, but if you look at the deficit targets they hit, which we thought was a good aggressive target, $1 trillion over 10 years, if you look at the debt to gdp ratio and a look at where they got the deficit on an annual basis relative to gdp, in getting their they assume this additional revenue we are talking about.
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it seems to me we should get our heads together and figure out how we get the revenue that is projected to come in through simpson-bowles, the whole plan, as well as the cuts. >> let's stick with the tax piece, even though that is your peace. the budget committee does not get to do taxes, even though you will have a piece in the negotiations. in your view, is there a way to get the $1 trillion of deficit reduction that you need from revenues and still bring down tax rates? >> and still pay to bring down tax rates? that is the question. math.saying, let's do the look, i thought the town of speaker boehner's remarks was very good. i also want to see what the substance was. what i do know is that different people heard this remark and
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interpret it in very different ways. grover norquist said he thought it was a good statement by speaker boehner, and other people who think we need to generate additional revenues to have a deficit reduction plan also say he made a good statement. it would be good to know exactly what he is talking about. >> how about for you? the whole premise of tax cuts, as we talked about the last 24 hours, is to eliminate deductions and bring down rates. that is what happened in 1986. >> i am talking about, what is our starting point in terms of the rates? what are we negotiating from? are we negotiating down from 35% or from 39%? i want to emphasize this point -- simpson-bowles, go look at it. they assume the amount of revenue that you would achieve if you allow the tax rate to go up. their tax reform plan is built off an assumption that you will
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get the amount of revenue as if he started at 39% and went down. they begin with what they call the plausible baseline, which presumed this decoupling. my view is that if we want to take simpson-bowles as our framework, which i think we should in terms of the revenue and cats, budget cuts, we should follow their guidance. >> and i have not heard any comments from republican suggesting they are not willing to go where you are are talking about. >> than republicans should come up with a alternative way of achieving the revenue component of simpson-bowles. i can tell you what they are talking about mathematically right now does not get you there. i would not want to take any actions that shut the door on getting the revenue parts of simpson-bowles. because they lay it out very clearly. they got revenue and they have
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cut. >> let's talk about the spending side. someone on the stage earlier this morning talk about $1 trillion in tax cuts, $1 trillion in discretionary spending, $1 trillion in entitlement cuts. we have not got any texture around that. how you get $1 trillion -- what are you willing to do to medicare that will have lasting savings over a 10-year period? and one not turn out like the provider cuts -- the last for a year and everybody, they do not work. am open to all ideas in this area. let me just say -- we need to move medicare away from a fee for service system, and we have begun to do that. and since no incentives for anybody in the system to contain
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costs. it does not create incentives for the patient to contain costs and is not create incentives for the providers to contain costs. we are putting in the building blocks to get there. i think we can make significant savings in the area of what is called dual eligibles, people on medicare and medicaid, a relatively small percentage of the overall population but a very high percentage of the cost. there are a lot of misalignments between medicare and medicaid payments. you can do things like look at edugao pop --atte medigap policy is. some of the increased incentives for people to spend more on medicare. these ideas have been discussed to contain costs. when i think we should avoid, at least in the first instance, is not trying to contain health- care costs but simply
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transferring those costs on to other individuals. our first focus should be on containing overall health-care costs, which consume about 18% of our gdp and will rise rapidly. >> one way to get away from fee- for-service is to move toward a premium support plan -- how much money you get, go out there and shop in the marketplace and buy what you can. >> what we know is that the nonpartisan congressional budget office of the bat and their conclusion was it does not contain costs. -- look at that and their conclusion was it does not contain costs. >> is not fixable? >> not according to the congressional budget office. they concluded that if he simply create, provide a voucher to go out into the health-care system, as you know, in the private health care system costs have been rising at at least the same rate as in the medicare system. in fact, medicaid obviously has
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serious problems. medicaid costs are much lower rate -- medicare has risen as by the lower rates on a per-capita basis. the private health insurance markets -- simply transferring somebody out of medicare into the private health insurance market will save medicare money but it will save medicare money by requiring premiums to go up dramatically on these individuals whose median income is $23,000 right now. >> that hopefully will get some of you -- you have been number of health insurance company executives who may be able to weigh in on that. a couple things that have been suggested -- raising the retirement age, does not make any sense today to have the retirement age be the same or slightly higher than it was seven decades ago. >> social security, number one thing, we should create process like with ronald reagan.
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i think we should look at early retirement age and social security, which is currently 62, and look at ways to great incentives for people to work longer. create incentives for people to work longer. the early retirement -- that has the joy beneficial effect of reducing social security costs, but also keeping people working longer, providing for their families and generating more income for the economy and for the treasury. i think there are other things you can do, but look, i am open to a conversation about this. when it comes to things like social security, again, you have got to take a mixed approach. simpson-bowles look-or others, -- a look at simpson-bowles or others, they have a combination of revenue and spending reform. >> you are willing to lease look
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at that? >> i am willing to consider them as pop -- part of a possible plan, but i do not think we should jump to solutions, especially in medicare, that's simply transfer cost. in social security there are other ideas, some of which we discussed in the super committee. >> social security has to be a part of this? >> i think we should look at social security as -- simpson- bowles that-why did. -- of that is what simpson- bowles did. they said, look at social security, but not as part of our deficit reduction target. there is room for a conversation there -- what others have said is they do not want that to be part of how you calculate your deficit. >> what do you have to do? you talk about a process that lasted over six months, maybe a little longer. what do you have to do in the
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next few weeks to give people the confidence and this congress the credibility it needs? >> two things. with respect to the sequester, you have to come up with at least an alternative mechanism do generate $110 billion in deficit savings. salida not do this across the board meat ax approach. put together a proposal that combines getting rid of direct payments, some of the bigger agriculture subsidies, a proposal would eliminate some of the tax breaks for oil companies. >> why not just do that? >> you have to talk to our republican colleagues about what you just cannot do that. we did not even get that to a vote. my point is, there are a number of ways you can achieve $110 billion.
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and prevent the sequestered. that is only for one year. then you have to do a agreement on the tax piece and create a very clear structure and timeline we get the so-called gurk -- grand bargain done over a six-nine month period of time. some expediteddo procedures. a lot of thought on how you create a situation that forces action. the sequestered here, for all its problems and -- it is hopefully going to result in at an action-forcing event. there are risks, but also potential benefits. >> what does the president need to do to get this deal done? there have been stories in the last 40 hours to talk about how he is going after the people to take his case, little thought is what the election was about. is that helpful to the process,
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or is there more of an inside game he needs to play to keep what happened a year ago from happening again? >> i think it is both. it is clearly he has to reach out to congressional leaders in both parties. he has already reached out -- i am sure they will build on that. continuing the conversation with the public is important. you had some conversation here about interpreting election results. one of the things not talked about in this election -- what we will do with respect to resolving tax policy issues, at least some of them, was discussed in virtually every debate, something that was front and center. >> is that a mandate? >> i think the public has spoken on that, but that does not mean the president is not willing to reach out for the people.
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i do not think he is going to say, on all these issues, a whole range of different issues, there is a mandate. there are certain issues like immigration reform where clearly they were at the center of the campaign. the president is on very firm ground saying we have heard from people on this. that does not mean he is going to -- he is not willing to listen. he is. >> in the house, your leadership -- nancy pelosi stepping down? >> i do not know. >> you do not know? >> i do not want to speculate. my guess is we will find out fairly soon. i think she has done -- my view is she has done a good job. was very willing, as you probably read in books written about this, to support a budget agreement that must come out of the discussions between speaker
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boehner and the president. >> if she does step down, would you be interested in the job? >> i am not getting ahead in anything. if i was betting, i bet she is going to stay. >> you bet she would stay? >> this is all speculation. >> last question before i open it up -- a lot of people have comments or questions for you. we also have a couple people who will be at the white house tomorrow. a group of ceo's meeting with the president. what can this group do to be constructive, to help get this discussion where it needs to go? what should they do and what should they not do? >> is an important initiative -- i just heard the ad on my way over here. the message is beginning to get out on the airwaves. i think it is really important to keep the dual focus, meaning,
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i guess we need to come up with a credible long-term deficit reduction plan, but let's not do anything that compromises our efforts to accelerate the economic recovery. for example, i have proposed extending for at least one year the payroll tax cut. or its equivalent. you could structure in a different way. the congressional budget office came out a few weeks ago with analysis that showed overwhelmingly in terms of its impact on jobs and the economy that the one-year extension of the apparel tax cut gives you much more jobs and economic bank for your buckland -- balk than keeping the top rate at 35%. it is not even close. you are putting more money into the pockets of 160 million working americans were stretched right now. they will go out and spend that money and goods and services in their community. it has a much bigger multiplier
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effect. i do wonder about some of these arguments that you have got to keep the rate at 35% because of the fragile economy and jobs. not, at least so far, silence the opposition to extending the payroll -- it does a lot more for the economy. >> part of the argument is small businesses. >> i have also seen -- we can go through all the stories. they talked about the hamilton projects -- people who have looked at these defects for a long time and relatively small changes in the top marginal tax rate, according to the studies, and according to the crs, are not the driving factor in these economic -- >> the payroll tax would be much more powerful? >> no doubt that right now with a soft economy that has a bigger economic boost.
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>> we have a couple of questions. >> the first, the simplest and this powerful idea i heard during the failed 2011 grand bargain was to raise the eligibility age about 65. should this be on the table? >> it should be part of the conversation. one very practical complicating point on this, that goes to the supreme court decision on the affordable care act. one of the wrinkles, more than a recall, one of the provisions decided was that people on medicaid, the initialed people who came into the affordable care act and medicaid did not have to be covered by states to chose to opt out. frankly, that creates a problem because the affordable care act would have otherwise provided day potentially feasible option for people between 65 and 67 who are not knocked out. now you have people at
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relatively low in comes at the age of 60 -- even if you took the retirement age up. at 66 years old, somebody busting their back is a construction worker retire -- where will they get their health insurance if they are between 65 and 67 and cannot go on the exchange? having to live in a state that says they will not participate because -- medicaid, nine governors have said. these are practical concerns. >> do your legal experts say there is some way to fix that? >> you would have to find a way. you could do it legislatively, but you'd have to have agreement to do it. these are sort of practical issues that we need to deal with as part of that. the affordable care act did change the discussion with respect to the medicare age, but then you have this pretty sizable potential hall -- hole.
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>> one more -- these are ceo's, they are used to giving performance reviews. why do all of you not talk to each other and discover what each of you means by the statements you are making? actively pursue a solution and not just debate this -- would you agree that is not at this time -- is important at this time to do a right rather than determine who is right. >> we are excluding this forum from that comment. look -- there is no doubt we are not going to get there if we are not talking to each other. i just saw rob portman. i am not betraying any confidence is to say he and i already exchanged a conversation. we served together on the so- called super committee. my view is that those conversations are very important. they will began -- at the end of
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the day, those conversations will be important in forming the negotiations that ultimately take place between the leadership in the house and, of course, in the senate and the white house. i think every member can contribute to that conversation and they should be having direct conversations. i have already reached out to some of our republican colleagues to do exactly that. put more ideas on the table. >> we started with a group of senators and ex centers who all opined it was the ability of people from good will of both parties to come to gather and do what you and senator portman did has gotten worse than it has ever been. do you agree with that? you have been in congress for a long time. >> i was elected in 2002. no doubt that -- it was not as if it was all kumbayaa at that
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time either. but it has gotten worse. not so much in terms of the personal relationships. i think bair are still very strong personal relationships. -- there are still very strong personal relationships. it has gotten worse in the ability to compromise. i would say people should read the book -- you know these gentlemen well. one is from the american enterprise institute, the other from the brookings institute, the road to a book called "worse than you thought." it is hard. when you get into this discussion, everybody says, there we go again. just read the book. these are two scholars of the congress who have always been suspected -- respected as people who call the shots. look at the indiana republican senate race. dick lugar is a conservative republican with a high
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conservative rating. i have great respect for him. he was beaten by somebody who ran too far from his right -- to his right, who said his definition of compromise is when democrats agree with republicans. if compromise is a dirty word, we are in a big world of hurt. to follow other conversation, in addition to fixing the debt, i would encourage everybody to do what you do every day in your jobs, which is try to reach a fair principled compromise. it has got to go beyond common ground. we use the word common ground ayotte. look at the last election, there is not a lot of common ground in terms of overlap in approach. it has to be compromise, which means accepting some things you do not like on both sides and getting some things you do like as part of meeting in the middle. that is compromise. common ground -- we can work through the budget. certainly there are some areas
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of overlap, but it does not begin to get you to the kind of deficit reduction numbers we need to get to. you can only do that through compromise. i want to circle back to the jobs piece. you can only do that with compromise. it has been an interesting conversation on sequestration. the first time i saw some ads run about how cuts in defense would lead to all these job losses, 100,000 jobs lost in the state of virginia. what happened to the argument that cutting spending right away was the way to prosperity, which we heard from our colleagues for 67 months? why is it that building a tank creates jobs by building new roads and bridges and transit does not? of course it does. we need to dispense with this idea that just cutting somehow leads to prosperity. it does not. but we do need to cut in a measured, stable, credible way,
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during a period of time, to get deficit down. we need to focus on mandatory spending areas coupled with revenues. that is why simpson-bowles as a framework provides the right direction. >> other questions? blacks obama rejected simpson- bowles. -- >> obama rejected simpson- bowles. why are you considering it? >> this is both a strength and a week -- weakness for simpson- bowles. simpson-bowles provides great architecture. it does not flesh out every detail. nobody has taken simpson-bowles and converted that from a well thought out blueprint into legislation because there are lots of various ambiguities. the overall architecture of simpson-bowles says we should achieve deficit reduction
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through combination of cuts and revenue. it seems to me we could take that as the starting point. that is how we had deficit numbers. my view is we take the ratios, "wall street journal simpson- bowlsimpson-bowles, and move forward. if we disagree, we have an obligation to come up with something else. the president's budget is actually much more closely aligned with the framework of simpson-bowles than the other budget we have seen coming out of the house, for example. partly by virtue of the fact he has revenue in addition to cats. the president's budget has some significant cuts in mandatory spending programs, whether in the agricultural area, also some in the health-care area. if you look at his aggregate number of mandatory health spending, it is not far from
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simpson-bowles. so i think that that is the right framework. i think if you look at comparative plans, the president is closer to it. as you know, house republicans rejected it wholesale, the simpson-bowles plan. >> final question? >> from an overall comment, it is frustrating. we have heard a couple panels where it is almost like national geographic. we get to watch another organization, how it works, everybody talks to each other but nothing gets done. i wonder -- in a company you basically get to call a meeting, lots of people disagree. we had to cut and grow at the same time. who is the single person who can get everybody in a room to get them to move things to the next
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level? i was at a bunch of conferences this summer and last summer. simpson-bowles came up and we're still talking about the exact things that nobody has taken any action. who is the single person who can get everyone in the room and say this is the next step we need to take? >> you are right. is a messy process. the democratic process is a messy process. i have worked with law firms and lots of clients who could not make a decision and said, we will implement this now. there is no one person in our system, especially in a divided government, who can do that. the president is going to take a lead. and the president is calling members of congress to the white house, but the other question is who can get them all to agree? agreement in our system requires a willingness to compromise, and requires an ability to get the votes,
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ultimately, in both houses of congress. in order to get the votes, you need to be able to persuade members of your caucus. i think that, look, the fiscal cliff creates risks, but it also creates opportunities. the only other system that would allow you to both have an election and implement your ideas would be to move to a parliamentary system where the prime minister's party by definition has the majority and can implement something. we have a system that is very different. the checks and balances often need a lot more checks in the system, but -- i know you are frustrated. i understand people are frustrated. all i ask people to do is to study the facts and come up with what they think is a reasonable compromise. it is easy -- everybody has their own perception of what to compromise.
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that is why it is nice to get an outside view. you have simpson-bowles. you have to bang groups of bipartisan fall to put together a model. -- two groups of bipartisans who put together a model. they have a lot more revenue, frankly, than simpson-bowles. everybody should know -- simpson-bowles also cut defense more than anyone is willing to talk about. this across-the-board sequester is a bad idea, whether it's defense spending or other areas, but if we are going to talk about these seriously, we have got to really delve into the ideas bipartisan groups have put out their. >> chris van hollen, thank you very much. >> thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> the "wall street journal" ceo council is hosting its annual meeting in washington.
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up next, treasury secretary tim geithner talks about the so- called fiscal clef. that is followed by outgoing senate budget committee chairman kent conrad with his perspective on what congress and the white house should do. later, the economists at the new america foundation discuss the issue. this fall, and meningitis outbreak was traced to contaminated steroid injections produced by the new england compound in center in framingham, massachusetts. tomorrow, the house energy and commerce committee will look into the outbreak. we bring it to you on c-span 3 and c-span radio. >> the miami book fair international is live this weekend. two days of nonfiction books, e- mail's, interviews. featured authors include bill o'reilly, john walsh, and
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hristopher hichentchens posthumous book with a panel that includes his widow. join us online for exclusive author chats on facebook.co at cm/booktv. >> treasury secretary tim geithner backed up president obama's plan to extend bush era tax cuts -- secretary geithner spoke tuesday at the annual "wall street journal" ceo council meeting. this is a half-hour. >> ladies and gentlemen, the treasury secretary of the united states, tim geithner. [applause]
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the people in this room, we polled them before you got there, by two to one we do not expect a deal before we had the fiscal cliff. -- haight the fiscal cliff. there is a bit of a highlighting of the dominican republic, which we have not bigger gap. -- figured out. [laughter] i think there is a lot of anxiety in this room about the fiscal cliff. do you think we will go over it, or are you confident they will deal with the other side before we get there? >> there is a lot to sea, but i think there is every reason to believe this is a solvable problem. it is true we have a lot of challenges with the country. but there is a lot of support for trying to do things that will help make the economy stronger in the short term. universal support for extending
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the middle-class tax cuts -- that remove much of the greatest risk of the fiscal cliff. there's a lot of support for finding bipartisan consensus on other things that would make the economy stronger, like a set of amendments -- commitments to finance higher levels of infrastructure and education. there is bipartisan support for that. there is bipartisan support for doing the obvious things -- you have to pass an extension of the business expenditures, things that are important to do. there is a lot of support for trying to make some real progress on long-term fiscal challenges. a lot of benefit in doing that for the economy. i think this is a solvable problem and we want to do as much as we can to take advantage of this opportunity to make some progress on each of those fronts. >> one thing about which there does not appear to be agreement -- that is, should the bush tax cuts on over 200 to give
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thousand dollars be extended, or should taxes be raised -- $250,000 be extended, or should they be raised? i heard jay carney say there is no way the president will agree to anything that extends the tax cuts on the upper two brackets. that sounds like a line in the sand. is it? >> it is important to start by acknowledging that we find this encouraging that you have seen republican leaders in the last couple days explicitly embrace the recognition and support for as part of the balance of fiscal reforms a package that raises revenues. that is very important. that is very encouraging. reckoning the basic reality of how you govern a country like this in the face of the challenges we face. that is good. you know the president's position -- very simple. let's expand middle-class tax cuts, removing the potential greatest source of uncertainty and damage from the fiscal cliff. let's put in place a balanced
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set of a fist or forms that recognize the reality republicans now embrace that the most fortunate to% of americans are going to a pay a modest but larger share of income taxes. but he is not prepared to extend the upper income tax cuts. if you look at these questions carefully and thoughtfully, we have, as many people have done, look at the amount of deficit reduction you have to put in place. if you recognize what is a realistic share revenues will have to contribute to that and believe that we should not be asking middle-class americans to pay more in taxes, i do not see how you do this without higher rates. i do not think there is any realistic way to do it. it is not possible to raise money from upper-income people by closing loopholes, getting rid of deductions, stuff like that? >> what we propose is as part of the balanced reform package, a
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package that would raise roughly another 1.5 -- $1.5 trillion in revenues. 1% of gdp. to do that with a mix of modest rate increases, back to the clinton rates, which was a very good economy for the american business sector and private investment. to combine this with reforms that limit the value of deductions for upper-income americans. other ways to do that, but there is a lot of magical thinking about how much money you can raise some tax expenditures. a lot of people who have looked at that question and concluded that, incorrectly, there is a huge amount of resources there you can realistically race. that is not true. when people look at this and look at it carefully, they will come to the just reached. to do enough to restore fiscal sustainability, be careful what you do to long-term growth
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prospects of the country, and make sure we are not adding to the burden on middle-class americans. a mix of rates and deductions -- i think that is what that critical consensus ultimately well be on this. >> are you saying that if republicans do not agree to raise the top rates to what they were when bill clinton left office, we are going over the fiscal cliff? >> i do not see a realistic way to solve this without a recognition -- let's see the positive side. it is encouraging to see the leadership recognize that we are going to have to generate a modest amount of additional revenues from high income -- that is a good recognition. we are just at the beginning. we will get people -- we will see how it goes. i agree, this is going to be tough.
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i know the lack of clarity and resolution is going to be a burden and a source of uncertainty. this is something we will have to go through. we will govern this country better, find a better way to support things that improve the long-term breast -- growth prospects, we have to find a way to resolve the divide on this question about the long- term. that is worth trying to do. >> as you said and the president said, we have to both raise taxes and restrain spending. the proposal so far on medicare has been largely limited to the provider side. is the president going to leave here with a proposal to do something different on medicare in order to get the republicans to back off their position on the top rates? >> the president is putting in his budget -- not enough attention has been given to this -- hundreds of billions of dollars of carefully designed reforms to the health care
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system that are designed to reduce costs. we recognize better ways to do that, but there are hundreds of billions of bars in detail, specified reforms in that context -- hundreds of billions of dollars in detailed, specified reforms. he has proposed hundreds of billions of dollars in other savings in what is called the other parts of the government, and other mandatory, things like that. people can design does things differently. he is prepared to look at those things. we will start with where we have been, with pretty well designed federer forms. >> if all the president says is i have put out my budget, i have won the election, take-it-or- leave-it -- >> that is not the way he said. he was careful in the language he said on friday. we will look at what we have proposed. they are very substantial.
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one point of comparison, they are larger in the 10-year window than the health care savings proposed by simpson-bowles. take a careful look at those. we will take a careful look, to. >> what happens if we go over the if? if republicans cannot bring themselves to raise the top rates and accept what you are ofring? >> i do not see -- i do not sit well at -- c. why they would make that choice. why would you want to put the economy through that? the recognition that revenues will have to go up, after conceding their recognition revenues will have to go up on the most fortunate americans, why would you decide to take the economy over the if and put the economy through -- through the cliff and did the damage that would cost? because you are unwilling to agree to a modest set of rates for 2% of americans. it seems deeply implausible as a
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strategy and should be avoidable. >> why aren't you willing to say in order to avoid the economy going over the cliff we are willing to entertain a different way to get money out of the top %? >> when you take a hard look at the amount of resources you can raise from2 that from% of americans through limiting -- from that top2% of americans through limiting deductions, you will find yourself disappointed. we're looking for 1% of gdp. you are going to find it is hard to do that through deductions unless you want to raise taxes quite meaningful on middle-class americans. there are people who might argue that is a good policy. that is not the president's view. even if you think it is good policy, do you think it is more realistic? is it more politically realistic
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to get a deal that will involve tough things on all aspects of government, where instead of a modest tax increase limited to 2% of americans, a much broader tax increase. is that more politically feasible? in any framework that restores the score responsibility you will be asking pretty significant sacrifices of a broad swath of americans. everything that happens on the spending side effects people much more broadly in this context. what is proposed is an agreement of a ratio of roughly $2.50 of spending cuts for every $1 in revenue. those spending cuts will cut significantly into basic functions of government. government transfers that affect millions of americans. that is why -- that recognition
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why we think the shape of balance is going to have to involve that mix of rates and reforms. >> i feel i'm watching the same play with the same actors at watched last year. john boehner still in the house. you are still at the treasury. the president is back in the office. harry reid is in the senate with more seats -- why should i believe this will end any more positively than the summer of 2011? >> i will not try to talk to about optimism, but let's look at what has changed. you have republican leadership acknowledging relief for the first time in this debate in public that they would agree to increase revenues as part of an agreement to help restore fiscal balance. that is a very important change. you could debate what has motivated that change, and of course it is true that that approach has very popular substantial support among the american people. you have a much greater recognition that the economy
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would benefit from a carefully designed balanced agreement on fiscal reform. putting that off indefinitely is not good for the country. that is important, too. i think, again, if you listen carefully to what people are saying and what many politicians are saying, there is a lot of consensus on the things that would be good for the economy now. extend the no class tax cuts. that is98% of americans with tax certainty. agreed to fund a carefully designed program of larger public investment and infrastructure. that is very good for growth. make sure we're doing sensible things in education, educating future americans. things with broad bipartisan support. they will provide the basic anchor for a agreement. if we >> if we go over the clif, at some point when the congress
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to raise the debt ceiling. the president's leverage is until the end of the year -- if the bill to get a deal and that the taxes go up and the president will go on tv and say i tried, the republicans were obstinate, but the leverage shifts to them because you need the debt ceiling and the president has said that not raising it is impossible? >> i do not think so. anybody who looks at the experience of the costs to the country of those republicans employed last year will find that is not something it wants to repeat. you do not put the credit of the united states at risk, however. you cannot threatened to default on the credit, destroy the credit of the country as part of some game to get marginal advantage on policy questions. that has never been a responsible way to govern, judged by any predecessors, republican or democrat. my view is the people were part
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of that and are still there. they will do what congress only can do, pass the debt ceiling with less trauma. it was not just drama -- it was enormously costly and damaging. >> what is your role in this next act? will you stick around until we get a deal? >> i will play a valuable, important role until around the inauguration. >> let me ask you a couple questions. then you'll get to questions about the audience -- from the audience. how would you evaluate the state of play in europe now? >> i think what the europeans have done over the last several months is very important. they are in a much better position to more carefully manage the incredible difficulty of the reforms they still have for this country's. it changes the way europe is
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governed and run on financial policies. even with the most compelling amount of political will and -- does will be very difficult. reforms will take some time. what they have done over the last several months is give them a framework that makes that possible. they still have a lot of tough decisions had. what i'm referring to is the combination>> over the next few, there is a question about whether spain will need a bailout and whether germany will approve. if they do not, all the ecb offers are useless. you told us you thought catastrophe diminish to the part where they were manageable. they seem to be rising again. >> this will be true for years. you will see a lot of uncertainty about the concourse
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of each of these additional steps. in greece over time and any other country that gets itself in a position where it is difficult to borrow sustainable rates. by credibly committing leaders of europe to take out the risk of catastrophic failure from the equation from the markets, they bought themselves some space to do that without there being much damage on the rest of the world. they have to demonstrate they are willing to do those things. they are attending a much better position to do. even with the events of the last few weeks. i cannot think it is surprising that greece is still hard. the greek government has done enormously difficult things over these last few weeks and i think those reforms will be rewarded by more support from the europeans. he will see a little uncertainty about other aspects -- you will
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see a little uncertainty about other aspects. >> what does europe need to do in the next two or three months? texting have to demonstrate -- >> they have to demonstrate they are moving to put reforms in place. and a better mix of constraints. those are the key things they have to make progress on. that will take it difficult amount of political negotiations over the next several years. >> china. will the new leadership -- what will you be watching for? >> the big question is what will be the shape of this next- generation of economic reforms in china. they have had a remarkable record over the last 30 years of broadening the scope for property rights and private
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enterprise, managing a remarkable increase in incomes brought this but growth across an economy. but they have a difficult set of challenges ahead as the population -- as the population ages. they have run out of room to use those tax forms of stimulus to get the economy moving in the short term. you will look carefully to what they do to expand the scope for private investment, private initiative, better property rates not just for us but chinese innovators to expand opportunities. people are going to look to the chinese government to see what is the new direction going for it. all indications we have are that the people that will be at the center of the government going forward are committed to that path. not debating that basic trajectory. but there will have to make some
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decisions about the shape of those reforms. even as recently as last spring, despite the fact they were in the midst of a political transition, they were said the new frontiers -- they were setting new frontiers of financial reforms. they have some more work to do on that side but that is part of the commitment towards a more market oriented economy. >> what about their attitude toward their relationship with us? it is clear what kind of relationship they want with us? >> i think they recognize how important it is for them to have a stable expanding global economy and how important it is to them to still enjoy access to the major markets. it is because of the recognition that they have been willing to move on a range of things that are very hard for us an important to our commercial interests. i think that is the balance will
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hold going further -- going forward progre. the democrats keep citing clinton era rates. where the only relevant for income-tax rates but not for spending levels or as a rate of gdp? i will sign up for clinton era income-tax rates it obama commits to clinton era spending levels. >> buchanan repealed the aging of the population. repeal of the aging of the population. million americans become eligible for medicare and social security in the coming years. it is not something you can ignore. part of governing is recognized as the realities -- r ecognizing those basic realities. the level of spending projected
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in the president's budget is one example. the modest spending outside of its adamant rhetoric -- relative to the share of gdp. in the president's budget, the level of spending for non- defense discretionary spending, those levels are very low. the share of the economy relative to clinton. we think we have laid out a sensible balance in this context which shows significant restraint where you need to show it. but still recognizes that we cannot ignore the fact that we have millions of americans retiring. >> marcia believe -- why should we believe an administration that has ballooned the deficit attacked it with any vigor? >> the people who say that miss some basic realities of what drives our deficit. it is to the deficits have gone
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up. it has gone up for reasons you all know. let's just review them -- they go up significantly because of the cost of the bush tax cuts and expansions we inherited. go up significantly because of the cost of the crisis and recession. the policies be put in place which have helped bring economic growth back are only 10% added to the increase in deficit over this amount of time. people are mistaken in their basic app tradition. >> i hear about a continued concern that this administration is simply somewhere between does not get business and is tossed out to it. people complain about regulation -- and is hostile to it. people complain about regulation. you have heard the laundry list.
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what do you see to american ceos when they complain to you about that? >> i say tell me what policy you are concerned about and let's talk about the merits of them. if there is a proposal in the financial system you think is too costly are missed designed, some of what that is. what would you replace it with and how would you do it? if you look on balance at what is set up policies be pursued and what the fed pursued over the last three and a half years have been, they have been dramatically effective in not just putting out the financial buyers got lange the foundation for economic growth -- laying out the foundation for economic growth. the rate of growth in the assessment and productivity over
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this time has been a very good set of policies for the american private sector relative to -- if you look at in the country's experience in financial crises, i think we at basic test. if you are concerned about the shape of reform on the regulatory side, it is true financial reforms are tougher. you want to leave this economy vulnerable to a crisis like we had in 2008? the things we haven't done have been good to the long-term health of the american financial system. >> anyone else have a question they want to pose? yes? >> how much more debt are you willing for the american people to bear to continue to stimulate the economy?
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>> our deficits are not about the above 5% of gdp. they are down dramatically from where the heat -- are now down about 7.5% of gdp. there are down dramatically from where it started. you need to get the deficit down to the point where the debt stops rising as a share of the economy. to do that, you have to be slightly below 3% of gdp. that basic objective and there's everything we propose on the budget and at the same basic objective that anchors the proposals before us today. it is a basic recognition. how much is enough? that means you have to go down to below 3%. to go from 7.5% to 3% --
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spending stuff is automatic in a recession starts to recede but you still have to find consensus on a set of reforms. that is what this debate about the fiscal framework is going to be about. how to come to consensus on roughly 2% of gdp in additional savings. roughly 1% on the revenue side and the balance on the spending side. you do not want to do that quickly. if you try to do that too quickly, you will really hurt and economy that is still not growing as rapidly as he would like. given the pressures around the world in europe and elsewhere, you want to keep your focus on doing things to help make it stronger in the short term. that means you have to of a gradual path. -- to have a gradual path.
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>> this will be the last question. >> it seems one of the themes which inhabited the first four years was the balance between economic priorities and other priorities. how much political capital energy was spent on health care and other things. the question is, how do you strike that balance and you see that balance changing at the go forward into the next four years? >> let me complicate your question by saying about the balance between short-term and the immediate and long-term things that matter for the strength of the economy. it is important to recognize that as we get to this next stage of this fiscal reform debate, you have to think about this not just about how you bring this deficit down gradually to the point where there sustainable. you have to think about this and the terms of what can you do to improve the long-term growth
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perspective of the american economy. there are a set of things we have to do in and for structure and education just to name two. that are very important to the growth potential of this country and not very expensive. if we sacrifice those objectives in the interest of getting more fiscal restraint more quickly, we will do a lot of damage. i would encourage people to look at -- we want to look at things that are good for growth now and growth over the long run. that is why you do things that mattered to the near-term strength of the economy as a whole. but the president said our principal objective of the economic side will have to be what is good for the growth prospect of the american economy and how to design a balanced set
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of reforms to restore fiscal stability. i know there are people out november 13.y it's the end of the year approaches. why don't you just put off all the stuff to buy yourself some time? why not extend everything got to mark i would discourage you from doing that as an -- as an attractive alternative to review leave all the uncertainty -- alternative. you leave all the uncertainty. what incentive have you given anybody to negotiate? if you say again we are going to elay, what i -- and dleay gives people the confidence? they always believe if they hold out, they can just extend again. i know that cliff is unattractive. it would cost a lot of damage to
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the american economy. that damage is avoidable. but be careful about those who argue for and urge for last -- let's just extent. it will leave a different source of uncertainty which is what will give the people the incentive to come back and do something tough? thank you. [applause] >> on tomorrow morning's washington journal, a focus on the so-called fiscal cliff, expanding tax breaks -- extending tax breaks. our guests include nanticoke -- nancy cook, kevin brady of texas and rep sander levin. you can call in with your questions to steve latourette, a member of the appropriations committee. rep raul grijalva and jason
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dick. live at 7:00 a.m. eastern. at going senate budget committee chairman kent conrad sent a final deficit reduction plan would total about $5 trillion. he said building in medicare eligibility age in changing the formula for social security benefits could be part of the final deal. his remarks and the wall street journal's annual ceo council meeting are about 25 minutes. >> if there has been -- one of the most constructive conversation that has taken place in congress in the last couple of years has been a group of senators called the gang of six. we if i did all six but due to various scheduling conflicts -- we invited all six but due to various skin chekhov conflicts,
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we got one. senator kent conrad. they are negotiating in the back room. i would also point out senator kent conrad has been budget committee chairman and is retiring at the end of this year. senator, right to have you here. -- great to have you here. thank you very much. >> why don't we go back to the questions that take up on the first question that david asked? to set the context for this and get the mood of the business community. the you believe there will be some form of constructive best of it -- that does it deal -- do you believe there will be some form of constructive deficit deal? let's go to the second question.
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it is the deal, how are your investment plans likely to be affected? -- if there is a deal, how are your investment plans likely to be affected? this.quick vote on everybody have a chance to vote? 1, 2, 0r 3. okay. wait just a minute longer. while we are waiting, senator conrad was not only a member of the gang of six but a member of the gang of eight, every gang tried to contend with -- we should look at your tats.
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probably have every effort to put some sort of remark from the deficit deal. because he is retiring, we are expecting that to be -- he will tell us the secret of what is happening in the senate's right now. do we have results? 77 percent said it will increase investment jerry 22% say the same. 0 say it wouold decrease. a tremendous pent-up demand for some sort of resolution. let's go to the third question. are you optimistic or not optimistic about your business prospects over the next year? 1 is optimistic, 2 is not optimistic. senator, all we talked on the phone. you are optimistic there will be a resolution of this. i wonder if you could give us your sense of what would that
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look like? what constituent parts, what sort of revenue increases and what form? i'm speaking for myself. not as part of any of the group's i have been part of, whether it is bulls simpson or group of six or group of eight. at the end of the day here, we will be in the range of a $5 trillion pacas. i hope we are. i think we are going to have -- we will look back on what has already been done and factor that in. what has been done so far has been on the discretionary spending side of the equation which is less than 20% of the overall budget. so it is critically important we move to entitlements, reforming entitlements, and the revenue side of the equation. there will be additional domestic discretionary savings. there will be additional
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entitlements other than the main entitlements, that is social security and medicare. social security i think will be handled separately. if one of the part of the deficit reduction bill. any savings will be part of extending the solvency of social security itself. >> that is done howard? by reaching the age limit? >> it will be done in several different ways. extend the cap in terms of what income is exposed for funding social security. the age will be extended over an extended period of time. you also change the so-called bin points, a technical way of determining what social security payouts are. he will also be an inflation adjustment. the of this adjustment is done in a way that most economists say is not fully accurate-- the
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inflation adjustment is done in a way that most economists say is not fully accurate. >> the people in this room, they qualify for social stickered? >> sure. >> so there should not be a means test? respect to the question of -- >> that goes to the question points.n my former father in law as well a very successful man. he told me many times i do not want social security. i do not want to take it. if you do not want to, you don't have to. >> there are a lot of taxes paid for -- why shouldn't social
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security be any differently? >> it is designed as a social insurance program. if you pay premiums for social insurance, you ought to qualify for the benefit. i think much easier to justify means testing is medicare. i've voted as a member of the finance committee in number of years ago. a group of us passed in the finance committee means testing of medicare. >> i did not understand the justification there for working class families to pay a part of the medicare benefits for very well-to-do individuals. that is a very different model than the model for social security. >> at the end of the day, once all this is done on the
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medicare fund, what is the resolution likely to look like? >> the most likely resolution is something that is done to slow the growth to the growth that occurs in the underlying economy. if we can accomplish that by a series of measures, i think we would have done ourselves and the country world of good. slow the growth of spending to the growth of the economy. >> how do you do that? >> there are a series of steps that can be taken. more co-pays. going back to providers and asking them to take less of an increase. raising the age of eligibility which is more a check in now --
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more attractive now that we will have exchanges in place. many people who are not in medicare will have an alternative place to get coverage. -- meaning people who are not in medicare will have an alternative place to get coverage. >> are these elements likely to be part of a final deal? what happens to the defense budget >> i think it will be asked to take additional savings. it would not be asked to take the amount in the sequester. defenses are taken savings approaching $500 billion over 10 years. that is in the budget control act. the sequester would ask defense to take another roughly $535 billion of savings. it is done in a way that makes almost no sense. there is the prioritizing. i do not think any serious person has looked the approach and said that makes any sense at
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all. my own anticipation is that number will be reduced but there will still be a request for additional defense savings probably in the range of $200 billion. >> and that gets achieved? cuts at that level? >> well, if there is going to be an overhaul deal here, a deal that has anti the reform, revenue, additional discretionary savings, it is all going to have to move as packets. -- as package. that is my best judgment at the moment. >> talk to us about process. the fiscal cliff is a few weeks away to rid does this -- a few weeks away. extensions?
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how does the process work now? what do we get come december 31 and when do we begin to approach a resolution of the sort you just described? right here is what i have been trying to sell -- >> here is what i have been trying to sell. number one, a down payment. in the range of $400 billion. on the revenue side and on the spending side. those are things that would be done now that one could be a short are actually going to happen. because they would be passed now. if i mark that sets --a framework that sets out how much money they are to save and raise and what the balance is between the two. those committees of jurisdiction began -- then be given six months to work out the details,
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to provide specifics. third, if they fail for whatever reason, there be a fail-safe. that fail-safe actually goes into effect if congress if we does not produce the savings and revenue agreed to in the framework. >> sounds like a sequester. >> different than the sequestered. the sequester was designed to be -- to say this is not something anybody would want to do. this approach would stand back on its head. instead of having something that was widely seen as making no sense in being unacceptable, they have it fail-safe that would be policy -- that you could live with. my well live with if committees in jurisdiction to not reach
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that which is called for. it would have to be part of the package. said the that is offered, hopefully by leadership, by the white house. and what have all these elements. >> we are counting on the market to beat everybody into line. if this is not done in a responsible, rational way, markets will step in. secretary geithner just talked about putting the dollar at risk. put in the credit rating of the u.s. at risk. is there really a compelling argument within congress? when there is a crisis abroad, it is the first place people move into. the reserve currency around the world. is that hovering over these negotiations or that anxious about the markets? >> i think it is hovering over this. there is a more immediate prod,
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the reality that will confront every member of congress. these tax cuts from the bush era are all going to expire. this request, $1.20 trillion across-the-board cuts -- the sequester, $1.20 trillion across-the-board cuts. that is in law. the doctors who treat medicare patients are going to face a 28% cut. these are not somebody's imaginings. these things are all in law. they are going to happen. there is a debt limit the session -- that will have to be addressed. >> that could extend these things. >> they can.
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i think the market's reaction there is very important. the notion that markets would not react well to kicking the can down the road. i think it is more the market. the american public would not react well to just kicking the can down the road. >> bob zellick and austen goolsbee but the notion -- bought up the notion that this feels like groundhog's day. what is different post-election than pre-election? same players, slightly different complexion of players come inauguration day but not really. what has changed that gives the optimism that some deal will be struck now i could not have been struck before the election? >> first of all, the president was reelected. had he not been reelected, at
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the other side had taken power, he would have to wait for the new president. because you have the sitting president reelected, he did not have to wait. number two, we are days closer to all these things actually happening. the end of the tax cuts, the alternative minimum tax, the sequester, the automatic spending cuts. all those things are very close to being upon us. that does not deal with unemployment insurance and the payroll tax holiday. because those things are also set to end. so there is a growing momentum that i think will compel colleagues to act. could i be wrong? absolutely, i could. because there is rigidity in the system. especially on the far right and the far left.
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let's be candid. there is rigidities there. it is conceivable that you get into a negotiation and people just cannot adjust to this new reality quickly enough to make it time the decision. so you do go over the cliffl . i hope that does not accord -- occur. but it is possible that you have to get into going over the cliff before people opposite to act. >> epicenter last i described -- a senator last night described the president as introverted. not particularly outgoing in bringing people into the tent.
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is there a deficit of schmooze velocity coming out of the oval office right now? >> i would say he is sufficiently extroverted to have just won a national elections. i think we have for presidents who have been reelected for a second term by these kinds of margins. reagan being one to read obama being one. so this notion he is introverted and not affected -- really ? i would say he has been pretty effective. looking back, i do not know of colom read ezra kleins'
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today about all the things that have happened. the money for the financial institutions being passed. really dramatic health care changes being made. these are real things that have happened. you may not agree with them but those are real accomplishments. one war ended, a nother one being put to a close. if you think about what he inherited, it was a remarkable set of circumstances. i'm not sure he had much time to choose members of -- as previous presidents have your years to it -- he was dealing with one crisis after another. i can just say for me, i have been at the white house more under this president and all the other presidents i have served with combined.
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he is a serious guy. i expect that you will see now that a lot of these other things are not in crisis mode that there will be more engagement with individuals on capitol hill. i think that would be a good thing. >> the you need at the moment like this al -- an lbj type a personality? should we be able to rely on the vaster institutions we have here? should it require an activist president? they did not get to know each other. they are not out have -- having
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dinner, smoking cigars. that is tougher now. shouldn't those institutions be able to solve those managerial problems? >> they should but it does make a difference. bookt finished carrow's on lbj. here is the president calling the government printing office to make sure they do not close so that congress can get a bill printed because he knew he needed to act because if he waited until the next day, some of the votes he had might drift away. can you imagine? a president, and the ever- present i served with, calling the government printing office to keep them open? i do think a dah of that -- dash of that would be very helpful in what we are involved with now.
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on this complex issues, just as important. if he spent hours and hours together -- if you spend hours and hours together, a certain decorum develops. it is important in getting an agreement. >> thank you. it will go to some questions from the audience. >> do you think it is necessary for the senate to pass the budget and if so, when and you think they will do that? >> there are different ways of passing a budget. there is a budget resolution. we have heard a lot of criticism, a budget resolution was not passed. instead of a budget resolution, a budget law was passed call the budget control act. the budget resolution never goes
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to the president for his signature. i think a lot of people in the country do not realize. it is purely a congressional document. in this circumstance, a budget resolution is not what we need. i think we need a budget law. a budget control act was a book -- good beginning. set spending caps for ten years. it set ten years of caps and gave special powers to is special committee to deal with entitlements and revenue and said if you reach agreement, you will not face a filibuster. you will be able to offer that on the floor and get an up or down vote. that was a huge deal. they failed so the answer wa the sequester -- was the sequester. in this circumstance, i think we would be better to have a law
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rather than a budget resolution. >> another question? >> one last question. you are from north dakota. the bachmann oilfield is not changing the landscape of u.s. energy. that will change manufacturing costs during how long before that begins to pass through into the national budget as a revenue producer in a variety of different ways? >> if you permit me to go beyond that -- it is incredibly exciting. it is helped dramatically reduce our dependence on foreign oil. we have gone about 60% dependents down to 42%. in a report out yesterday said by 2013, the united states will be energy independent. that is a huge deal overtime --
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a report said that by 2030, the united states will be energy independent. that is a huge deal over time. that will strengthen the economy. that will help create more jobs. that will improve our competitive position. that is going to have a budget in fact the most budgets are looking at a five-year window. very rare that we go beyond five years three the vast majority of time, it is a five-year window pretty do not get that much help in the first five. it has enormous implications when you go to the second tenures in the third 10 years. -- ten years and third ten years. we are lucky to have it. >> on optimism, the results of that third question. that audience was pretty much
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split down the middle. i will ask robert thompson to come on for closing remarks. >> thank you very much. one of the few optimistic nights. i would like to thank our sponsors, without whom we would have been over it this booklet with this conference. i like to thank dorothy and her team for organizing the conference. i would like to thank ellen murray. she loves washington and conferences so much that he decided to stay in washington and london organization that is one continuous conference. leaves the time, he
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"wall street journal." mr. allen murray. [applause] and now outside, and other beverages and banter. thank you very much. >> coming up on c-span tonight, economists at the new america foundation discuss the potential impact of the fiscal cliff. in which automatic tax hikes and spending cuts would take place unless congress acts. then nancy pelosi hosts a conference with newly elected democratic members of the congress. harry lee and mitch mcconnell talked about the upcoming negotiations on the fiscal
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cliff. and whether congress can avoid it in the lame duck session. this fall, a single men indicted outbreak was traced to contaminated steroid injections produced in massachusetts. tomorrow, the house committee looks into the outbreak. live starting at 10:00 a.m. eastern on c-span3 and c-span3 biya. -- c-span radio. >> wevery weekend, the latest on fiction authors and books. you can see pass programs and get our schedules on our website. you can join in on the conversation on social media sites. >> economists discussed the so- called fiscal cliff and upcoming negotiations between congress and the white house, tax hikes
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and spending cuts. this is held by the economist for peace and security and the new america foundation. it is 90 minutes. >> good morning. i and the chair of economists for peace and security. i'd like to welcome you to this symposium. -- who's afraid of the fiscal cliff?' the eps is an organization of professional economists concerned with questions of
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military security, national security, economic security, social security, with the broad question that we have been grappling with intensely for the last for five years. r five years. we are not an advocacy for lobbying groups. we gather together professionals working on this question to represent only themselves -- who represent only themselves and have the advantage of being able to speak to you with clarity and conviction. eps is also a membership organization. our web site is www.epsusa.org.
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i wouold invite all of you here and all who may be wanting to visit the web site. if you share the goals and objectives of the organization, join us or let us your support. we have the great advantage of privilege of having a very strong supporter and great friend in bernard schwartz, after whom this symposium is named. he planned to be here this morning, was not able to get here. but we at eps are tremendously appreciative, bernard, of your encouragement and you're backing -- your backing over
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quite a long time now of this symposium caesar -- series. strict to essentials, the fiscal cliff is a device constructed in affect to force a rollback of social security, medicare, medicaid, among other programs. as the price of avoiding tax increases and disruptive cuts and the federal civilian programs and in the military. it was partly fortuitous, given the expiration dates of the tax cut, but also partly policy- making by hostage-taking, timed for this moment following the 2012 elections. a contrived crisis.
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the plain idea, which is now unfolding, was to force a stampede. in the nature of stampede, arguments become confused. panic tends to flow, fear compounded by doubt, especially when multiple, poorly understood forces, economic and political, all appear to be pushing the same way. our task today is to sort through those forces, and to ask whether any of them, taken singly or together, justified the forces of fear and doom that we are now hearing. i would like to break down this issue into four major questions. which frames the structure of
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the morning's discussion. first of this is, is there really a limit debt and deficit -- a looming debt and deficit crisis facing it government and the united states in such a fashion that urgent action involving major sacrifices is needed now? there is a broad belief that this is the case. what is the foundation of that belief? and is that foundation sound? possible that other issues should be considered more compelling and should be brought to the four -- fore in this next
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period of economic and political crisis? secondly, narrowing the question from a broader financial and this will position of the united states government, is there a crisis looming in the administration and financing of social security, medicare, medicaid, which demands reform of those programs? or is this a manifestation of a political agenda not justified by concrete economic facts? that is the subject of the third panel. third, with the military
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sequestration, built into the fiscal cliff, be the calamity that many have announced it to be? is it something that must be avoided by action within the next six weeks? that is the question which will be discussed in the second panel. i believe that panel will also take up the question of whether, given that you're 21 years after the end of the cold war and that we have learned hard lessons in iraq and afghanistan, whether this is an appropriate moment to began to reconsider just what our national security posture and force structure should be.
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speaking for myself, i can give you my short answer to the three questions. is there a looming fiscal crisis for the united states government? no. are there compelling separate reasons to oppose long term cutbacks on social security -- to impost long-term cutbacks on social security, specifically on medicare and medicaid? no. do we face a disaster if we fail to act in the next six weeks but instead deferred decisions on all of these matters until the early part of next year? no. those are my short answers. my professional as well as personal message is -- don't panic. this is not a moment of high drama. it is a moment for no drama.
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people have expressed their confidence in the president against a very clear alternative who promised higher rates of economic growth, and return to past prosperity at the price of an following very severe cutbacks in public functions and social insurance. the people expressed their disbelief in that formula. they did so very wisely. they also remove the argument, which i think was widely expected to hold, that we must act now because political conditions will be worse in january.
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and that this represents a kind of last chance to get our house in order before entirely different political forces take control. not going to be true. the public in short that it will not be true -- ensured that it will not be true. political conditions will be quite different in january from what was expected. there is in any event at this moment space to think and consider what we should be doing, what our national priorities are, what a -- what economics tells about the balance of risks that the face. we should use the space. i suggest this morning's
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symposium is designed in that spirit and i am very happy to be introducing it and to turn the podium over to stan who will moderate the first panel on the question of the fiscal cliff. >> thank you. i appreciate you turn the podium over to me but i will sit here. we will all be sitting here. as it were to the cameras following us. good morning. thank you. i often wonder what was going through ben bernanke's man -- mind when he used the word fiscal cliff for the first time or when they decided they could not sit with a really wanted to say. which is that the combination of tax increases and spending cuts that will go into effect will cut the deficit too far too fast and therefore what he was saying -- the other elements that contribute to gdp growth were not able to absorb it. so what bernanke was really
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saying is he recommends the deficit be higher than it will otherwise be under current law. anyone who thinks that in february -- [indiscernible] he wants this back? is that what you're saying? excuse me while we work it out. he -- back in february and probably still today, someone recommending the deficit be higher than it would be under current law would have samples i painted on a forehead and a bit brighter and bigger. and become more of a political target. all the discussion about the fiscal cliff so far and those recommending it be avoided,
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prevented, whatever, do not use the phrase and we think the deficit should be higher. even though that is the inevitable conclusion. mathematically, that is what has to be happen. -- has to happen. about the letter put in the news ticker to the 15 ceos from financial-services companies. in the six paragraphs, the image of fiscal cliff seven times. never used the word deficit once. two weeks later, there was a letter from various other sectors saying it never mentioned the deficit once. it is an interesting communications challenge. how do you say you do not want the fiscal cliff to happen but you what spending to be higher and revenues to be lower and therefore the deficit to be greater than it would otherwise be? that is one of several things we will be discussing in the panel.
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i will oppose some rules. we will give five minutes or so, we think are the key elements of the fiscal cliff. i'd like you to interrupt us as we go along pretty will take questions at the end but it will make it more interesting and substantive for everybody if you just challenge us and ask for more information, ask us to repeat something as we are going along. you have a question already? okay. all we ask that you get to a microphone to do it. we are recording and that is the one thing you need to keep in mind. with that in mind, let me quickly introduce the panel. jamie you know. i will not introduce him anymore. stephanie kelton is the head of the economics department at the university of missouri kansas city.
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bruce bartlett is someone i have known for ever. have known forever. he is now one of the foremost authorities, and has been for some time, on tax policy, tax reform. you can see his writing in "the new york times." he has a great economic blog. he would be shooting me if i did not mention the book. he has several. the latest is "the benefits and the burden." it is a history and review of tax reform issues. i get my tongue% now, right? and then we have the chief economist of the center for budget and policy priorities, which is where budget analysts go to talk to budget analysts. stephanie, i am going to start with you. there is a basic question. did you see the look of shock on
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her face? the basic question to start with. jamie said we should not panic, but you cannot turn on cnbc or bloomberg and not talk to people about to panic, if they are not already. is there a reason we should be concerned about the fiscal cliff beck's is the damage that great that this is something that has to be prevented under any circumstances? please use the microphone. >> i agree with jamie. >> ok. we can move on. [laughter] >> the clear and present danger is not why the deficit or the debt it -- is not the deficit or the debt, or the so-called fiscal cliff. the danger is we still have a very weak economy. we are looking at, as you said, an environment in which people are in panic mode over the fiscal cliff. i think there is a lot of
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support, actually, because the population does not seem to understand what the fiscal cliff is and what it means. what they are hearing on television is a lot of hype about what will happen if the fiscal cliff is not avoided. that is actually generating quite a bit of support for both sides to come together. it seems adult. it seems like the right thing to do. put your partisan differences aside for the country, and find some way to avoid the cliff. what that means in practice is striking some kind of deal, what we have heard of, as a grand bargain. it is important to keep in mind that the grand bargain itself, is really a form of austerity. this is an austerity plan. when you have an economy that is still struggling to find its feet, and you are talking about imposing austerity, i think we have seen pretty clearly, watching europe over the last 3.5 years -- that is not a good
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idea. we definitely have time to start -- to stop and get this right, before we follow greece. >> the congressional budget office says that gdp will fall but -- by 2.9% if the fiscal quick hits. i do not think that happens on january 1. is that correct? >> the full effect certainly would not happen. these are estimates about what might happen during the fiscal year. sometime between january and september 30, he would see a fairly sharp increase in unemployment, and gdp growth turned negative return-, a return to recession. >> but on jim number one -- -- on january 1 -- you have talked about this as a fiscal slope, not a fiscal cliff.
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>> correct. these tax increases do not go into place all at once. you do not have a billion dollars on day one. the cuts are the same way. spending cuts are phased in over time. this would work its way out over many months to be something that could be devastating for the economy. in a matter of days or weeks, you would not get that outcome. >> i just mentioned a report. cameenter's report, which out in october -- >>, it actually came out -- the first version came out almost six months ago. i finished the draft of the night before going in for achilles' tendon surgery. that was six months ago. we updated in november. we were concerned that people would panic and strike a bad budget deal, and wanted to emphasize that it was not -- but
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it was not a wily coyote moment. it was a slow, not a fiscal cliff. -- a slope, not a fiscal cliff. >> what actually happens on january 1, in terms of economic impact? >> tax rates go up. that means that people -- tax rates go up. unemployment insurance, the additional federal unemployment insurance expires. the temporary payroll tax cut expires. longtime unemployed workers who lose an average of $300 a week. people see a reduction in their take-home pay. it is a weekly amount or a bi weekly amount or a monthly amount. you do not all of a sudden get a
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bill for the whole thing. over time, it starts to build up. the alternative minimum tax kicks in and for high income people. that does not happen until they actually file their returns in april. things start slowly. there is plenty of time to work out a smart response. >> bruce, on the tax side, can any of this be fixed retroactively? >> all of it. there is no constraint. that is one reason why i am optimistic about this situation. for at least four years now, hit the main barrier to doing any kind of sensible economic policy, especially related to dealing with the debt or the deficit, has been not one of our parties is nuts. the republican party, they are completely out of their minds. their attitude is -- and they
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have torpedoed every effort to do anything meaningful about the deficit or the debt because of one reason. they adamantly refused to raise taxes by so much as a penny. this is what created the crisis we are now facing. remember that the crisis all began because the republicans refused to allow the debt limit to increase. they were prepared to default on the debt, they are so obsessed with their ideologies. finally, there were brought to the bargaining table, and they agreed to this sequester mechanism. they agreed to $600 billion in cuts in defense and $600 billion in domestic programs. every single republican thought this would not happen. they were going to create the super committee. remember that? they would come up with something better. everybody agreed that was smart. but the committee went down the
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drain, because the republicans would not accept a single penny of tax increases. this may be a justifiable position, if taxes were extraordinarily high. in fact, taxes have been extraordinarily low for quite a long time. the postwar average is 18.5% of gdp, federal revenues. right now, they are 15.8%, and have been considerably below that the last several years. if there was any truth to the republican obsession with the idea that low taxes stimulate growth, the economy would be booming. they have no credibility. they lie about everything. for some reason, serious people in the country take them seriously. obama does not take them over his lap and spank them as they deserve. he treats them with undue respect. that has all changed now.
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the tax increase is going to take place anyway. the republicans can only stop it by taking some positive action to extend these tax cuts that they are so obsessed with. by the way, republicans do not think there is any problem with any level of spending cuts. only the tiniest tax increases would devastate the economy, contrary to everything the congressional budget office has said, which is exactly the reverse. taxes will rise automatically if they do not do anything. they thought they were so clever two years ago. they sat on their hands and did not do anything. finally, at the last minute, predictably, barack obama caved, and said we would expand everything for two years, and take out everything he demanded as a requirement. he totally caves to them. they congratulated themselves and patted themselves on the back. now, things are different. we have had an election.
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it is clear the american people have repudiated the republican ideology. 60% of people support higher taxes to reduce the deficit. if they are holding a losing hand. what i said this morning is, all obama has to do is have the courage to wait. let us wait until the taxes have actually gone up. then, anything that fixes the problem is a tax cut. you see it? relative to the situation that will exist on january 2. all of a sudden, the political dynamics change. he has the power. all he has to do is sit there and say, "this is what i will accept. anything you send to me that i do not want, i will veto, and you can start over again." the republicans are absolutely guaranteed to panic. they will be the ones who will cave, if the president holds to
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his guns, which he has shown no evidence of being willing to do in the four years before. but maybe now he will decide that he really means what he says, and he is really going to do something about this. i am very optimistic. think about the long term. in my opinion, this would be fixed within the first couple of weeks of january, made retroactive. nobody will notice it. it will have no impact on the economy whatsoever. we spoke about the problem of republican intransigence. whatever is done in generic, we make it a temporary. -- whatever is done in january, we make it a temporary. people would see that as irresponsible, facing another fiscal cliff. i see this as another opportunity to force republicans to face reality on taxes. that is good, because our problem is revenue, primarily.
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if we were raising the historical share of gdp as revenues, nobody would be saying we have to do anything. we need that revenue. that provides the foundation that gives confidence to bond buyers that they will get paid the interest they are primarily concerned about getting. i am very optimistic. my only qualms about the president fifth willingness to negotiate hard with people who deserve the. hard. >> two things. first of all, no more caffeine for you. second, i think it is important, given your opening remarks, though we remind everybody that you used to be a republican. if you were a deputy assistant secretary of economic policy in the reagan treasury department. >> actively bush. -- actually, blush. -- bush.
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>> and you were ron paul's chief economist. >> yes. >> you are cut off from caffeine before you even get started. can you possibly top that? >> i guess my question -- bringing greece into the discussion, does that do a disservice to the discussion, given the scale is so different? i hear this a lot out there, and it seems unrealistic. i believe alan simpson, his personal view is that taxes should be increased for everyone and stay that way. is there any current significance, politicians in power now, that are promoting that view? his that clear? >> there are not any. we can move on. >> when i mentioned greece, i was not referring to the u.s. becoming greece, the way we often hear we are becoming the
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next gris, and it is used to create hysteria, and force people to think about ways to bring down the debt and so forth. what i was referring to is that we have seen the impact of austerity. it would be rather foolish, knowing what we know, to go ahead and implement the same sorts of policies here, when the economic conditions call for something exactly the opposite, entirely different. we are not going to cut our way to prosperity. austerity is not the way to go. i hope we would get a chance to get formal talks, and then i can do some more. >> you might be a professor. >> since this has come up, maybe this question is for later on. i completely accept the idea that this is a demand-based
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problem. but the argument in the back of all of this is that a social welfare state with decent benefits like social security and medicare is simply not sustainable, that it is a degenerate social welfare system that has brought on the euro crisis in france, in italy, in england, and across greece. >> it sounds like it is a lob for you, jamie. >> the iraq crisis is the european manifestation of a worldwide financial crisis. it is primarily a crisis of the financial system, of the banking system. the principal victims of that crisis are the peripheral countries of europe. they are severely constrained by the fact that they are part of the eurozone arrangement and
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cannot finance themselves. they are therefore basically subject to the diktat of the european union and the european central bank and the imf. the united states is not in that position. it is in exactly the opposite position. it is the country to which capital flows in a crisis, not the country to which capital retreats. the united states treasury has seen rising bond prices and falling interest rates. on a long-term basis in the last five years. that is a side of two things. it is a side of -- a sign of the world situation. it is also a sign of the fact that our institutional and arrangements are such that the united states government is a good credit, he is a good bar --
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borrower. it is a borrower in which one can have confidence, because it pays its bills in a medium it controls. there are risks to the, but it is extraordinarily remote. there is a risk of inflation or currency depreciation, if you consider that a risk. >> maybe i did not ask the question quite right. is there a robust defense of generous social welfare? >> in either case is the social welfare system to be blamed. it is true that in europe you cannot write a check if you are the government of greece if you do not have money in the bank. but there is no comparable institution in the united states. the u.s. government writes checks as required by law. if our social welfare system is such that it somehow poses a burden on the economy that cannot be sustained -- it is exactly the opposite.
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what happened in the crisis, and it is very clear in the data, is that our system of social security and related programs, including medical insurance, provided a massively stabilizing force. that would otherwise have deeply aggravated and accelerated the crisis. the real crisis in greece right now is the cutbacks in these programs, which are resulting in massive reduction in pensions, massive increases in the poverty rate, to 25% unemployment, and the emigration of anybody who has a professional credentials and can see elsewhere to go in europe, australia, and the united states, which undermines the social institutions in that country. it is a consequence of policies they have been required to follow. the united states have not, followed -- has not followed
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those policies. our policies have been stabilizing, with the result that we do not face the same crisis. what we are being urged to do or stampeded into doing would in fact make our situation dramatically worse, not better, and would do so, i think, quite quickly, if those policies are implemented. >> let me explain something. the european welfare state is not too large to be managed. the whole -- this is all mythology, about how the europeans have big government. virtually all of the difference is accounted for by one thing. instead of paying for health insurance privately, they pay it through government. think about all the money that is taken out of your paycheck or that your employer pays for health insurance.
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if we read-labeled all of that money taxes, and everything else was the same, we would have a system more like what theirs is. we are obsessed with not having government control of health expenditures, because we are afraid this will lead to higher health spending. this is just the opposite of the truth. the truth is that every single country with national health insurance pays about half as much for health as a share of gdp as we do. we pay 17% or 18% of gdp on health. we could have a system with health outcomes no worse than britain -- many people have visited britain. people in britain love their national health system. their mortality rates and all this other kind of stuff is now worth an hours. we could have a huge tax cut of 8% of gdp. that is the promise of health
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reform. unfortunately, that argument was never made back in 2009, and we still have to make it. the problem is that it is a mythology that they have the government. we are the ones with big government. we call it the health sector. also, the real problem here, in so far as we have any problem at all, is that our taxes are simply not high enough to pay for the spending that people absolutely insist on having. and that is fine. but we have one party that basically are criminals and blackmailers. they will not allow those revenues to rise. and yet they want all the same benefits. they say, "we cannot have higher taxes, because this will destroy the economic growth pizzle back in 1993, every single republican economist said bill clinton fifth tax increase was going to cause a massive recession.
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every single one. every single republican pollster said mitt romney was going to win. they were 100% wrong, and we had a boom instead. they have no credibility. they are wrong about everything. they lie about everything. >> do you feel better? ok. anything you want to get off your chest? you indicated that you have a formal thing you would like to discuss. use the opening remarks, even though we are already open. you can get up there, if you like. >> it is a slide show. >> a slide show. i am sorry. >> you are going to make the rest of us look bad, you know. >> i thought everybody would have won. -- one. i guess when i started thinking about the fiscal cliff, and what the options are, i came up with
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essentially three. when is to do nothing and hit the cliff, and let the cuts go into play, the tax increases go into play, we have been talking about here. the other is to avoid the cliff and strike some sort of grand bargain, to jump before you hit the cliff. the last one is the one that everybody here seems to favor, which is to not do anything rash, to stop, take some time, and think about what you need to do to get the policy right. >> is that not working? >> i am not sure. >> can somebody movie -- can you for the slides? -- forward the slides? >> if we do nothing, we get pushed over the cliff. what does that mean? the estimates are that this means something like a reduction
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in the 2012 budget deficit somewhere on the order of about half, not quite half. in total, a cut in the deficit of a magnitude of around $487 billion. this is too much even for the peterson foundation. >> and go back. >> they say it is too big. it is too soon. it is coming too fast. it is too much to take all of one's. it will push the economy back into recession. what we need is to go more slowly. we need the grand bargain. we need something with entitlements on the table, because they are not on the table with the fiscal cliff. what the peterson foundation advocates is that we address the fiscal cliff by striking some kind of deal now to avoid it, but to put our nation on a more
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stable, sustainable path, fiscally. so far, we have heard i think from the president quite a willingness to go after the grand bargain. previously of the record, and subsequently on the record, the president says, "i am absolutely confident we can get the equivalent of a grand bargain over six months. we can meet the balsams and target -- bowles-simpson target and more. we need to provide the kind of certainty that the business community is looking for." what to do? most economists agree now that if we do not reach a deal and we hit the cliff, and no deal is
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struck after some sufficient period of time, it means a recession for the u.s. economy. the business community is putting pressure on the president and others to come up with some way to avoid the cliff, get the deal done quickly. the population, as i mentioned, seems eager for cooperation and compromise, a deal. will we jump at the chance to strike a grand bargain, because it is perceived as the best way to avoid a recession and deal with our longer-term deficit problem? these are the estimates of what would happen if we hit the cliff, versus the cbo's alternative scenario where you keep the bush tax cuts and avoid the sequestration, but some other portions of what we would be facing go into effect. extension of the payroll tax cut
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goes away. unemployment compensation for long-term unemployed goes away. but you keep the bush tax cuts and avoid the sequestration, spending cuts. if you hit the cliff, you go into recession. gdp growth by next year turns negative. unemployment rises to 1.7%. -- to 8%. you have rising longer-term debt. what is the right solution? what is the right choice? our budget and policy priority says there is no single magic number, but they have come up with a single magic number of sorts, and the magic number is $2 trillion. they argue we have already gone a good ways toward getting to
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that. the deficit reduction would stabilize the debt to gdp ratio. we would see a a, the long run finances of the country in order -- we would see long run finances of the country in order. we could bring the deficit as a share of gdp down to 2.5%, on average, over time. under balls, -- bowles-simpson, the original version, the deficit would have gone from around 5% next year all the way down to practically zero, ten years out. the goal is gradual reduction over time, so the deficit shrinks almost to nothing. you have these three different scenarios, right? is there a pointer in here,
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because i could use that. the black star is the fiscal cliff out,. -- outcome. if we hit the cliff, the deficit falls from here to about here. that is a sizable reduction. what the center of the budget and policy priorities is advocating is a $2 trillion reduction over time, which would stabilize the jet -- the debt to gdp ratio, and put the a deficit at around 2.5% of gdp. if simpson -- simpson-bowles starts with a larger deficit, but aims to shrink it to 0 over 10 years. which of these make sense? are any of these reasonable?
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i never answer questions about the right size of the deficit, or what government policy should be regarding the deficit, without thinking of the deficit in context. i never considered it in isolation. it makes no sense to do so. putting it in context means understanding of how the government budget position impacts other sectors in the economy when other sectors outside the economy also matter. in other words, we can divide any country into three parts and examine that country. part of it is domestic. pull the domestic government sector out. pull the domestic private sector out. everything else is the rest of the world. you have these three pieces, and they fit together perfectly. financial flows out of one sector go somewhere. they end up in another sector.
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if one sector is going to accumulate a surplus, it can only be done in some other sector is running a deficit. that is math, as we have heard so much about. there is a reason that graph looks like a perfect mirror image. if it is. on him, -- that is because it is. everything has to net to zero. one sector's deficit is another sector's surplus. the red is the public sector budget. you concede, going back as far as the 1950's, but the government is almost always in deficit. the private sector, the domestic household and domestic firms together, is almost always above zero, in surplus. the green is the rest of the world.
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there was not time, years ago -- there was a time years ago when the united states ran trade surpluses against the rest of the world. the rest of the world ran deficits. we have a surplus. those days are over. we have trade deficits. that means the rest of the world is accumulating a surplus on us. the only way that we can keep the domestic private sector in surplus is for the public sector to be in deficit. the question is, how big does the deficit have to be? look what happened during the clinton years. this is the last time we had budget surpluses in the u.s. democrats love this. this is the badge of honor. we were the party of fiscal responsibility. we brought you budget surpluses,
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and they got some wondered after clinton left office and bush petered away the budget surpluses. those are widely hailed as a very good thing. but what do they really mean? if we are striving to balance the budgets or surpluses in the future, we better step back and figure out what that means for the domestic private sector. what it meant was that if the government was hoping to collect more from us than it is going to spend -- that is, the government is going to run a surplus. the rest of the world is going to take more from us than it is going to spend buying our goods and services. that drives the domestic private-sector, us, into deficit. it has to. it adds up exactly. if you have a 4.5% trade deficit and a 1% budget surplus, the private-sector is going to be in
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deficit 5.5%. the only way you keep the private sector in the red, above zero, is if the government deficit is big enough to more than offset the trade deficit. if the u.s. is running trade deficits on the order of 4.5% of gdp, the government deficit has to be at least 4.5% of gdp, or the private sector will fall below zero. every single time. here is the cbo forecast. this is what is projected to happen to the government deficit if we hit the cliff. this is the alternative scenario. if we hit the cliff, the projection is that the government deficit will shrink to around 2% of gdp. deficits of 2% of gdp, together
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with trade deficits of 4.5%, in the private sector is by definition going to be in the negative. we are going to be running a deficit. here is the same image flipped over. it is the mirror image of that. it says that if the government reduces its deficit, it is reducing the surplus to the non- government sector. you have to be able to put these things in context. why does it matter? what difference does it make if the private sector is in surplus or deficit? it turns out it makes a big difference. the private sector budget balance is shown here, the blue line. those gray bars are recessions. we have had 11 of them since the second world war. in every single case leading up to a recession, you will see that the private sector budget position -- the surplus shrank.
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and then the private sector tried to retreat. you see them trying each time leading up to a recession. they are trying to say, i do not want my surplus to get any smaller. i am getting uncomfortable. at that point, if the public sector does not loosen its felt as the public sector -- as the private sector is trying to tighten its belt, wheat and-up in a recession. the -- hamas we -- we end up in a recession. government debt is equal, and to the penny, to the non-government surplus. in every country in the world, this is true. the government deficit is the non-government's surplus. their red ink becomes our black thing. their deficit is our surplus.
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the grand bargain means austerity. those reductions in the government deficit -- if the government continues to reduce its deficit, it means the private sector surplus will fall. it shows you what will happen when the private sector surplus falls too far. this picture has no economic meaning. it drives lots of concern and hysteria, but it has no economic meaning. alan greenspan was asked a question by paul ryan. this was years ago. paul ryan posed a question. he said, "wouldn't it be a good idea to introduce personal savings accounts? and wouldn't that put social security on a more stable, secure footing, going forward? when this improve the solvency of the system?"
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alan greenspan's response had to come as a surprise to the congressman. he said, "i would not say that social security is on on sound footing today, because there is nothing to prevent the federal government from creating all of the money it wants and paying it out to someone." that is a quote. the issue, he said, is, will the real sources be there in the future for retirees when they are needed? he turned the focus away from financial resources, which can always be there, to the real resources, which is what we should be focusing on -- employing people, producing the capital, the goods for the next generation, having the real resources. it is what matters. it is time we realized that the
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federal government is not like a household. the u.s. dollar comes from the u.s. government. it does not come from china. we control our currency, as jamie said a moment ago. we are very different from the countries that adopted the euro, that gave up their currency, that can no longer issue currency in order to spend. the united states government is not revenue-constrained. that was greenspan fifth point. we cannot be forced into default, another point alan greenspan has made powerfully, over and over again. there is no economic reason for a grand bargain. we are living way below our means. we are told we are living beyond our means. we are living way below our means. the red line is our potential gdp. the blue line is where we are.
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the difference is the output and income that we sacrifice every day we fail to bring this economy back to full employment. we have tons of spare capacity. factories are not operating anywhere near historically high capacity utilization rates. there is all kinds of extra capacity to produce. we have millions of people who want to contribute. and we have useful things for them to do. this is our infrastructure report. what do we need? $2.20 trillion to bring our grade up from a d iverakk,' -- overall. we have people who need to work and the financial capacity to do it, the real resources. what we do not have is enough jobs. we are focused on a grand bargain, which is another way of
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saying austerity. president obama got it right when he said that companies are awash with cash. what they are missing is enough customers out there to prompt demand and justify them spending more on plants and equipment. businesses need customers. they do not create jobs. austerity is the opposite of income creating sales. it reduces income. tax increases reduce income. spending cuts reduce income. both, i would argue, are the wrong medicine for the economy today. we have seen the effects of austerity. we do not want to follow, these countries over the cliff and gratuitously -- we do not want to follow these countries over the cliff gratuitously. [applause] thank you. >> i want to talk to brad.
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take the next. >> i have a couple of things to say. our $2 trillion figure is not a recommendation. it is actually a response to the fact that everyone thinks that $4 trillion is what is needed to achieve -- a debt stabilization gold, stabilizing debt to gdp, to keep that from rising faster than the economy, which ultimately is unsustainable -- how long that is sustainable is a question. how fast it is rising is predicting the future, which is hard to do, as yogi berra and neils bohr, an interesting pair, have said. the arithmetic behind it -- it is not a recommendation. if you want to stabilize the ratio 10 years out, the budget window everybody is talking about, you do not need $4
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trillion, which is the number everyone thinks bowles-simpson would entail. you need $2 trillion. you could choose to take longer to stabilize the debt, or stabilize at a higher level of gdp. you do not need as much. or you can do it faster if you want to pursue a dangerous austerity program. you can get $1 trillion over 10 years just for the bush tax cuts. we argued very strongly that you definitely need a balanced the deficit reduction program, bounced meaning revenues have to play a part. you do not stabilize the death. we are not talking about balancing the budget. we are talking about stabilizing debt. if you do not do that on the backs of low income households. low income programs have been
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exempted. the 1990 budget, "read my lips," where george bush did allow texas to go up -- taxes to go up, there was an expansion of the earned income tax credit. when i say grand bargain, i am not thinking austerity. my notion of it is what ben bernanke has said whenever he testifies, as stan said. except larger budgets while we have selected the economy. defer stabilizing the debt to down the road. i do not think we have to do a lot of thinking about that. we have a lot of ingredients. we could do it immediately, if it were not for the political problem that bruce identified. >> you have been scribbling
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furiously. >> three points above the long- term future. first is, as others have said, he is very difficult to forecast the fiscal position of the united states government, 20 years out. the past record is atrocious. anybody who was here in the early 1990's will remember that nobody was expecting there would be surpluses a few years later. why did that happen? it happened because of the force of power of the information technology boom, the creation of private credit, and rapid increase in tax revenues. stephanie showed us something that was not a forecast at the time. those who were there in 2000 remember that the secretary of the treasury at the time and the chairman of the federal reserve were talking about a 13-year horizon for the complete elimination of the public debt. there was no forecast that the
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technology boom would come to an end, but it did. from 2000 onward, we were back into a more normal position of the government running substantial deficits as the private sector rebuild its financial position. that is the first point. long-term forecasts, the idea that one can control the future position of the debt and deficit by actions taken today, is an extremely tenuous and debatable idea. the second point is that there are certain assumptions being made which create extremely scary scenarios. those numbers that were shown -- in stephanie's presentation, the expectation that public debt would rise close to 200% of gdp by 2005. what is that based on? two important assumptions drive
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these projections. when is that health care costs will continue to rise more rapidly than output, and that the share of health care in gdp will rise to 40% or so by 2080. this is something we know is not going to happen. it is in violation of herbert stein's law. when a trend cannot continue, it will stop. [laughter] the reality is, we are not going to spend 40% of gdp on health care. it is not going to happen. building that into a forecast is a mistake that should be corrected. there is an assumption that interest rates will rise to levels consistent with what they have them in the past. but short-term interest rates, if they rise higher than the rate of gdp growth, would generate a compounding effect,
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which will greatly increase the debt to gdp ratio. but ask yourself -- how likely is it that short-term interest rates will be driven up 400 basis points in three years? it is not likely at all. if it happened, the economy clearly would collapse. people's houses would lose fell you. they would default on their mortgages. you would have a disaster. not going to happen. adjusting these assumptions to give you a less tendentious forecast would greatly, i think, he's the political climate surrounding this discussion. -- ease the political climate surrounding this discussion. we need to consider what our priorities are. right now, what are the problems we can tackle? unemployment. foreclosures. climate change. infrastructure.
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these are problems that have a very concrete form and a very immediate and pressing -- place immediate and pressing demands on us. why is it that this very uncertain, and in some respects highly improbable, and in any event -- and certain and probable deficits scenario is driving our immediate policy discussion. it makes no sense. in three or four years, if it turns out that the people who have been wrong for decades on this question, in spite of repeatedly asserting their position that the markets are going to turn against the u.s. government, if it turns out they are right, the u.s. government can address that problem at that time. but there is no reason to assume
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it based on the record we have so far. nor the position being taken by the capital markets. we do have people, institutions, foreign central banks, with a lot of money at play. what is their attitude toward the u.s. government fiscal position? it is very clear. look at the long term interest rate. look at the bond rates on treasury bonds. they are at historic lows. that reflects the true attitude of people who look at this with large amounts of money on the table. >> a question from the audience. i think so. you may have to leaned down or is the microphone. >> i lived most of my life in europe. it always impresses me how core countries had no difficulty financing both a welfare state and public investment. we seem to look at trade-offs.
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is there, in your view, a trade- off between growing entitlements spending -- and it is growing, with the retirement and costs of medical care. is there a trade-off between entitlement spending and more public investment? i notice we do not have a separate investment budget. we seem to regard all of government spending as equally evil or good, or doing the same thing. instead of dividing it between entitlements spending and consumption and public investment. could you comment? >> i would say very briefly that you would see a trade-off when you would see a strain on physical resources, a strain on the capacity to use the capital equipment, or a strain on the supply of labor. when there are no such strains,
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quite the contrary, as stephanie pointed out. we have a vast excess supply of labor, a vast underutilization of capital equipment. one issue we need to face it is resource costs and energy prices, but that is not being driven by global use of the moment. it is being driven by other factors. i am not optimistic about the long-term potential growth. but is there a trade-off between what we should do to protect our elderly population and to provide adequate medical care to the whole population, and what we should do to protect our infrastructure and address energy and climate issues? no. we are underperforming on both fronts. >> it is not a budget trade- offs. as long as we think revenues can only be this high, there is a trade-off among those priorities. we have to accept having higher
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revenues to pay for the things we want. the softens that trade-off. impediments are not a drain on real resources. -- entitlements are not a drain on resources. they are a transfer. when we are at full capacity, we have a trade-off. the issue is, we think taxes should only be here. that was probably too low leading up to now. it is certainly too low going forward. >> your point about capital versus operating expenses -- i was part of the, the commission to study whether the u.s. should have the capital budget, created during the clinton administration. i went into thinking we should, and came out of it thinking we cannot, because the decisions would be made by politicians has opposed to accountants or someone else like that. those are definition questions.
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think about new york in the 1970's, when the police department was considered a capital expense. try to imagine those same decisions at the federal level. suddenly, education would be classified as a capital expense. it was those types of questions as well as one other. would you classify a missile as? it is a capital expense when you build it and an operating expense when you press the button. it was getting too complicated. i came out of it thinking you should not divided. >> one should be careful about arguments that we should be spending more on investment and less on what is classed as, let's say, social security or what is called entitlements. for one thing, military procurement accounts as investment, but we should only be doing that to the extent that we actually need it for legitimate national security purposes. the president's point about not
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having as many horses and bayonets as we had in 1970 and could be appropriately applied -- 1917 could be appropriately applied. education expenditures -- it is hard to see why that is counted as investment and health care is an operating cost. >> seniors are going to say, just because we are a little older than the kids you are educating, you can invest in us as well. it became a definitional nightmare. >> i am a lawyer, not an economist. [laughter] >> do not rub it in, ok? >> i am delighted to be here, because i am interested in peace and security. stephanie, when you were putting those charts up, there
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were two of things. economists always tell me that our trade deficits are caused by a lack -- we do not save enough. is there causation in that formula? or is that just an economic accounting? secondly, net exports -- my understanding, when you are running-net exports of a major portion of your economy, that is a drag for your economy. a big part of producing economic prosperity in this country may be to go after the trade deficits and reduce those as part of our gdp growth. are these correct things to be thinking about? is that the right analysis fax >> ok. -- the right analysis? >> ok. let me take the last one first. is it correct that trade deficit act as a drag on gdp?
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yes, it is. if the deficit were a surplus instead, we would have hired gdp, presumably higher employment, and higher economic growth. could we do even better? could we achieve full employment domestically with the right mix of macroeconomic policies, and be able to consume everything that it is possible to produce here at home, plus anything the rest of the world wants to produce and ship to us? i think that is certainly something worth thinking about. it is possible. we do not tend to think in those terms. we tend to think in terms of jobs leaving, corporations leaving, producing abroad. whenever we buy something that is produced elsewhere, it is costing jobs. we could have a jobs program
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that allows us to run our own economy at full employment, take advantage of the ability to produce at capacity, have all the goods and services that we can produce domestically, and enjoy whatever the rest of the world wants to produce for us. right now, much of the rest of the world does rely on exports as part of their economic growth strategy. they want the u.s. dollar. as long as they are willing to send things to us in exchange for the u.s. dollar, it could be of benefit to us if we got our own macroeconomic policy correct. >> paul gallagher, eir news service. a question for professor kelton. i did not hear everything you proposed. but if there is no monetary debt crisis, if there is not a fiscal
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cliff but a physical economic cliff, what would be your response to a hamiltonian debt reorganization, creation of a national bank for purposes of pursuing infrastructure platforms and related development, and assumption of by thessociated with that national bank? that would have to be accompanied with a glass- steagall reform. >> it is an interesting thought. the motivation for schemes like this are driven by the thought that the debt is too big, and the way to get around that to finance things is through direct money creation that did not involve the offset, in terms of borrowing. this is something congress could do. congress could decide it is not
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going to offset, dollar for dollar, deficit spending with increased borrowing. that would, i suppose, produce some hand-wringing about the size of the national debt. if we had better understanding of what the risks and challenges are, in terms of growing debt -- for me, it is the debt service that becomes an issue. it is not the debt bank to gdp ratio, but the debt service. i think, for me personally, i prefer a better understanding of how the monetary system actually works and understanding the debt is not the risk people make it out to be.
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>> i think it comes down to the fact the financial system, on which we have relied to finance support economicly and set the direction of economic activity. thehe 2000's, it was housing and real-estate disaster, the senate -- this financial system is not functioning as it should. the deficit destruction distracts our attention from the fact that these institutions that are central to the functioning of any private capitalist economy need to serve the larger public purpose of supporting economic activity and doing so that is -- in a way that is constructive to the whole. as long as this is the case, the
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public sector will be running substantial deficits because the tax revenues will not be there. there are structural issues. you have to have decentralized decisionmaking. that is what private banks are. with thecopie homeowning sector, with the problem, the public sector is basically going to be playing with a very weak hand. >> we are coming close to running out of time. the three of you will be the last questions in the audience. keep your questions short and we keep our answers shorter. >> my name is tyler.
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is it not true -- >> were you not in the fourth vote? >> is not it true that it does not pay for spending? >> short answer. >> yes. >> quick question. what about the national economy? we talk about raising revenues by taxing the rich more. the standard cynical response is the rich will avoid being -- paying taxes. we know people offshore money and i have been reading lately about how the u.s. is also a haven for offshore and money from other countries. how much is that a problem in
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our current situation and how can we prevent it from being a problem in the future? >> the main problem is with corporations. multi-national corporations which are able to arrange their affairs in such a way that they do not appear to realize any profits anywhere. this is not just a problem for us. if you read the british newspapers, is a huge problem over there. starbucks has never paid any taxes in britain because it claims it has never made any profits. there are lots of ways these things can be done that take to do -- take too much time to explain. it is a problem related to multinational corporations. >> the last question from the audience. >> i am with peace action. i do some lobbying around
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military spending. i know you will talk about that later. what i have been finding is that when i talk to anybody in politics, they do not have the same understanding you guys have about the deficit and the budget. everybody thinks this is just a terrific problem. -- horrific problem. i am convinced this is not a problem. i would like to see some changes in the way we spend our money. i think we do not need to be spending what we are spending on the military and we could use that money in better place. -- wheys. we could require -- ways. we could enable the government
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to negotiate. there are ways to address it. i find myself a little bit confused about how to do the argument. >> you do a great job in describing these kinds of things. >> i am not sure. there are a lot of parts to the question. how to talk about the fact, the priority and the debt sensibly. the problem is humans think that a budget is a budget and a household budget is the same as a government budget. it is very different. there are a lot of discussions we have had up here about why that is always the wrong road to go down. what really matters is that we have the productive resources in the economy and having enough,
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having our priorities straight. arguing the priorities, arguing that -- i do not know. i am floundered. it is a big question. a tough question when you are confronting people that are in panic mode about the deficit. what really matters is having a strong economy. focus on that first. thanks marc. -- think smart. >> very much the same message. we have all had the experience of being on the receiving end of a high-pressured sales job. where you have got to make up your mind now. the only information you have is the reason is what i am giving you. -- you have is what i am giving
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you. a condominium sale, or a car deal, i think you would recognize that is exactly what we are facing as a country in this post-election. . -- period. the extraordinarily confident assertion of things that you may, you would find out were not true. take a deep breath, get a cup of coffee, and think things through. that is the approach we are trying to occur -- trying to encourage. there is this long-term deficit problem, some would say, that we need to address, but we should do so in a sensible way because it is not urgent.
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and those who say, we need to place our priorities on the immediate problems we actually face, and at the very best, differ this other issue -- this other issue which is highly suspect at some other time -- speculative. it is extremely hard to find a footing for that argument. but this is a moment, a gift from the american public, to take that deep breath, to be realistic about the world as it is, and to approach the next two years, four years, with a kind of new spirit of determination
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and realism and practicality. i hope we can move in that direction. >> 30 seconds. >> we do a lot of talking to people, members of congress, and others, and persuading the public. what you want to do is be armed with some facts and analysis. when you start to get the hysteria, there is always the, actually, and point to someone else about what is really going on with social security and medicaid. >> we have to end in about a minute and a half. one quick question for everybody. same question. bring it back to the fiscal cliff. has the debate over the cliff, the fact they have said this will cause massive layoffs, have we finally put to bed the argument that federal spending cuts do not affect jobs? can we conclude that spending cuts do affect the number of
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people being employed? >> yes. >> yes. >> i still do not think republicans believe it. defense cuts cost jobs. other cuts create jobs. [laughter] >> do we feel vindicated? yes. and does the other side believe it? no. >> something has occurred over the last several months saying this will cause massive layoffs. here is the last question. do you have a twister or a blog blog?itter or a >> i do not. visit epsusa.org. >> my twitter handle is @ deficitowl.
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neweconomicperspectives.org. >> you can find where our twister is and our facebook is -- twitter is and our facebook is. >> would you all join me in thanking everybody? >> congress returns tuesday for the first time since the 2012 elections. up next, nancy pelosi told a news conference with the newly elected democratic leaders. then senate leaders talk about the occult -- the upcoming negotiations for the fiscal cliff. that is followed by more.
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>> we will be joined by committee members, republican representative henry -- kevin brady of texas, and a michigan democrat. you can also call in with your questions. the democratic representative from arizona, and jason dick. washington journal is live on c- span at 7:00 a.m. eastern every day. >> patrick murphy, who defeated alan west, spoke for new members to take office next year on the
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113th congress convening. this is 20 minutes. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2012] >> they need a wide-angle lens. [laughter] >> still coming. not yet? >> wow. >>ok. ok. nope. still coming. >> wow.
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for our new members to come on well, wasn't it? they say that a picture is worth 1,000 words. well, the picture that you see before you is worth millions of votes -- millions of aspirations and dreams of the american people for problem solvers to come to washington to get the job done. today, we officially welcome our washington. they are extraordinary leaders who will make our house democratic caucus the first in history -- in the history of civilized government -- to have a majority of women and
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minorities in the caucus. you can applaud that. before you, you see a broad coalition of people that stand ready to work with president obama to move america forward. of the 200 democratic members of the 113th congress, we welcome 61 women. we welcome 43 african- american's, 26 hispanics, 11 asian-americans and pacific islanders, six lgbt. now, we are not welcoming all of them. some of them have been here.
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that is what our ranks look like. together, the diversity of our caucus celebrates the strength of our nation. this caucus is a picture of america. all of our democratic colleagues will play a critical role in support of president obama. each one of them comes here as an independent representative of his or her district. i tell them all the time --
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their job description and their job title are one in the same -- representative. we need not only the diversity that you bring ethnically, geographically, generationally, gender-wise, etc. we need the diversity of your thinking brought to bear to strengthen our policy. we will work with the president to create jobs, grow the economy, shrinking the middle class, protect medicare and the
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affordable care act, reduce the deficit in a responsible and balance what way, and they have come just in time to do that. house democrats are ready to work with the president, our senate colleagues, and across the aisle for certainty for our economy and our middle class. with our newly elected members and the democratic caucus we will work to together reignite the american dream. to build ladders of opportunity for people who want to work hard, play by the rules, take responsibility. central to all of that is strengthening our small businesses, our entrepreneurships in america, and having a vital and thriving middle-class. we have for to do, and we are all ready to do that work. since i began speaking, even more members have come in. come on in. julian from california. we are very proud of all of our members. they could not celebrate this tremendous, success without the leadership of steve israel, the chair of the democratic congressional campaign
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committee. when i asked him to take this responsibility to serve our country and our colleagues, i said to all of you that he is a gold standard of a member of congress. he knows the policy. he cares about american people, and that drives him to do the politics to increase our numbers to pass legislation that takes us forward to improve the lives of the american people. before i bring him on, i wanted to have a representative of the freshman class to speak on behalf of the class. i am very, very honored to welcome a fighter for the middle class, a real representative of his generation, congressman- elect patrick murphy. his election -- with the other -- is a cause for celebration. his election sends a message to a new generation of americans that their voices will be heard at the table. congratulations, congressman- elect, patrick murphy. >> thank you. thank you, all, and thank you, leader pelosi, for your leadership and for being here with us. thank you, all for all of your support along the way. my name is patrick murphy from florida district 18, the new youngest member of congress. i did defeatists someone you may know -- a guy named allen west. you may have heard of him. with the help of a lot of people here behind me. thank you, all for your support. throughout this campaign the one message i heard time after time was the need for bipartisanship to reach across the aisle. that is what we need to do. we have to put our country first. what i have talked about with my colleagues is problem solvers, doing what is best for all americans. do what is best for all americans. that is what we will do. that is what our country needs. that is what i plan on doing. thank you for your leadership. thank you, chairman, steve israel, and thank you, all very much. i appreciate it.
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[applause] >> without further ado, still working to whatever comes next, the great chairman of the democratic congressional campaign committee, a leader in the congress. while he was going through all of the work he that was doing, he had to meet the needs --- and he did faithfully and first -- of his constituents who were under siege from hurricane sandy. he has his priorities in order. he knows his policy. he loves his american people. he is very patriotic, and by the way, he is very good at politics. >> thank you very much. thank you to leader pelosi for her tenacity and unprecedented work ethic. to my new colleagues -- welcome. thank you, all for being here. the leader told me when she asked me to chair dccc that it would be a labor. it really was a labor of love. i have enjoyed every single day of this job. it says something about our unexpected pickups that you unexpected had to use your wide-
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angle lenses to capture the incredible wealth of talent and diversity we have. with the new members, the tea party starts to roll back, and problem solving can move forward. that is what this election was about. these leaders wake up every single morning not thinking about left or right. they wake up thinking about how to move their communities forward, how to move this country forward, how to solve problems. they are solutionists. they are mayor that have had to balance budgets and fill potholes. they are veterans who defended the nation. they are small business people who created jobs. they are doctors who delivered healthcare. the message that voters sent due out this country is that they
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want problem solvers in congress who are focused on priorities, how you rebuild and reignite the middle class. they are not interested in tea party ideologies. they are interested in growing jobs and moving this country forward. the leader mentioned this. it is a major take away from this election. these new members reflect the priorities and the diversity and the values of the districts that elected them. the republican caucus if you look at it looks like a rerun of the show "madmen." our caucus looks like america. our caucus looks like congressional districts throughout america -- 61 democratic women, 43 member of the congressional black caucus, 27 of the congressional hispanic caucus, 10 asian- pacific-americans. as the leader said -- the most divers caucus in the history of congress.
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she said in the story of civilization. because of the addition of women and african-americans, and hispanics, and asians, it not only is the most diverse caucus in the history of civilization, but that will make us a more civilized caucus with the addition of some many that reflect diversity. it is that diversity, problem- solving, which is why we surpassed expectations in this cycle. my counterpart, who chairs the nrcc, predicted a net -- a gain of 16 seats for the republicans. speaker boehner predicted a gain of seats for the republicans. the cook political report the day after the election said this was a better than expected night for house democrats. when everything is tallied up
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and called, we expect that our caucus will have 200 members, a pickup of seven or eight members. these democrats defeated 16 republican incumbents. peter session said that they would pick up 16 seats. these democrats defeated 16 republican incumbents. that is better than the 14 that we defeated back in 2008, which was a watershed election. 49 freshmen members. who they are and what they look like and who they beat is less important than what they stand for. that is what is most important. how we win is less important than why we win. this is what they stand for -- they and we are ready for solutions and not
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sequestrations. we are ready to seek common ground, hopefully on a higher ground. we are willing to compromise. we are willing to find consensus with republicans. we will work with republicans to open up more small businesses instead of shutting down more planned parenthoods, which is what they tried to do. we will work with republicans to balance budgets so long as those budgets are balanced fairly, and the middle class is not asked to be the first and only to sacrifice. we will find a compromise. we are willing to find a compromise with republicans so long as that compromise is fair, balanced, just, and lose this country forward. we are ready for fiscal responsibility and not a fiscal cliff. this election is now over, ladies and chairman, and we, as house democrats, newly elected democrats, and those who are returning, we are ready to govern. the basis of governing effectively is solving problems
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and standing up for the right priorities. every one of my colleagues and leader's pelosi's colleagues elected in this cycle set that as a goal. they are ready to deliver. thank you very much. i will turn it back to leader pelosi. >> we are so proud of steve. although we did win 25 seats, we did not netted 25 seats. thank you, steve, for your great leadership and having this configuration. our founders envisioned the house of representatives, which would be a constant reinvigoration of the congress because big have to be elected every two years -- go o the voters every two years. this year, 25% of our caucus is brand new. quite an invigoration. here they are -- the fresh recruits, who among them will lead our nation in what other capacity as well as leader in the house of representatives. we may not have the majority, we may not have the gavel, but we have unity, and with that unity, a consensus built to solve problems to work with president obama, we are ready to work. are we proud of president obama and his wonderful victory? not to get into politics. with that, in case you have any questions -- yes ma'am? >> will you plan to stay on as
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the leader? will you run again? >> let us see. what time is it now? it is 2:00 on tuesday. i will see you right here 10:00 tomorrow morning. while i love you all very dearly, i thought maybe i would talk to my own caucus before i shared that information with you. i will see you 10:00 tomorrow morning. ok? >> i want to get your take on the scandal involving general petraeus. he resigned. general allan has been brought into this scandal. what is your take on the scandal? >> i think there are some answers we have to have about notification to congress. i do not have any reason to think that there are any national security issues at stake in what has transpired. some dishonorable things were done. the honorable thing has to resign and not to go forward. >> do you think this should been reported that the congress earlier? >> i do not know. we have to find out who knew what when and why would congress not have known? if it does not involve national security, the notification requirement does not trigger. if it involves poor behavior, then it would have been nice to know before we saw it on tv.
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>> i know you have met with the acting director of central intelligence. those conversations are proprietary. did you express to him what your concerns were about these notifications? did he reveal anything about where we stand with this? what i am striving for here is -- you want to have some answers, but you also want to put them on notice that we do have a problem with notification, right? >> i have no notification if it involves national security. the acting director is talking to the leaders about what has transpired and how we will go forward. it is important to know that this was a personal indiscretion as far as we know. why somebody would be personally indiscrete is their own problem. why they would do it in emails
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is beyond my imagination, but in any event, the honorable thing was done. the general has resigned. there are questions about timing just as a tradition to notify congress before we see it on tv. if it involves national security, that is a different story. so far, we do not believe that it involves national security. >> did you ask about that again today -- >> you acknowledge that it was private, but you want to know what i asked him? >> you do not have to tell me exactly what he said. >> i have always been a great protector of the practice of congress. one of my fights with the administration for which i have taken many hits by all administrations is that the administration always believed that they own intelligence
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information. we in congress believe that we are the custodians but that we have equal access to that information. you can count on me to protect the congressional prerogatives when it comes to our national security. i do not know if our colleagues want to stay. i know that they have a lot of orientation to do. you are welcome to stay for this. yes, ma'am? >> i want to ask you about the fiscal cliff. >> last question, guys. >> on the fiscal cliff, some of your democratic colleagues have said it would not be the worst thing to go over the cliff. they say that may actually strengthen the president's and democrats' negotiating game. what do you think? is it important to do a deal before the end of the year? >> absolutely. we are here -- i do not know if i speak for everyone here. i think i do.
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generally, in my caucus, i do not know which democrats you are talking about there. that speculation is not one that is generally shared by our leadership on house democratic caucus. we want an agreement. we want one, as mr. israel said, that is fair to middle-class americans. that we need to have growth. put growth on the table. how do we get growth? if we have growth, we can produce revenue. we make decisions about running. we make decisions about cuts to the extent that they promote growth. that is something that we stand ready to support the president and something similar to what he proposed last year. i do not know what his current proposal will be. we will hopefully find that out on friday when we go to the white house. i want you to be disabused of any notion that there is any widespread thought that it would be a good thing for our country for us to go over the cliff. we want an agreement. we want an agreement.
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i will see you tomorrow at 10:00, or those of you who are interested. see you there? >> stay tuned. >> i think there might be some interested.
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>> tomorrow, nancy pelosi announces her future plans. live at her press conference at 10:00 a.m. eastern on c-span 2. >> watch booktv online live tomorrow. streaming video, red carpet interviews with finalists.
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all online, live tomorrow at 6:00 p.m. eastern. add your comments on facebook.com/booktv. >> senate leaders harry reid and -- harry reid and mitch mcconnell outline their partie'' positions on negotiating on eliminating what's called fiscal cliff, a combination of automatic spending cuts and tax increases. from the senate floor, this is 20 minutes. >> after our election, i welcome everyone back. for some it was a nice break. for others it was a lot of hard work. we welcome everyone back and look forward to a very productive next six weeks. the senate's considering the motion to proceed to ask 3525, the sportsmen's act post- cloture. at 5:30 there will be a roll- call vote on a motion proceed to this legislation. on behalf of senator leahy, i ask unanimous consent that a fellow on the senate judicial committee, be granted privileges of the floor.
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>> without objection, so ordered. >> mr. president, for the last year, the president has been focused on the difference between republicans and democrats. for the last two years, this congress has not accomplished nearly enough. as we closed the 112th congress, it is time to focus on our shared goals and our common purpose. we will all agree that today great now challenges facing our country and this congress. those challenges are large -- too large to be solved by democrats alone and two large to be undertaken by republicans alone, and they are too grave for us to allow political differences to stand in the way of success. on the day gerald ford became
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president of the u.s., at a time of great national turmoil, this is what he said -- "there is no way we can go forward except together and no way anyone can win except by serving the people's urgent needs. we cannot stand still of slip backwards. we must go forward now together." so said gerald ford. mr. president, that is true today as it was back then. today the american people have many urgent needs. they need more jobs. they need economic certainty. they need opportunity and fairness. it is within our power as a congress to quickly address these urgent needs. it is within our power to forge an agreement that will give economic certainly now to middle-class families who can least afford a tax hike. it is within out power to forge an agreement that will ask the
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richest of the rich, most fortunate among us, to pay a little extra to reduce the deficit and secure our economic future. it is in our power to forge an agreement that will protect certain important tax deductions for families and businesses still struggling. it is in our power to forge an agreement that will take a balanced approach to reduce spending. in fact, mr. president, we could avert the fiscal cliff for 98% of american families and 97% of small businesses today. the house must only consider the senate-passed bill for those make less that $250,000 a year. this congress is but one vote away from avoiding the fiscal cliff for middle-class families and small businesses. as influential conservative bill kristol said this week -- "let's have a serious debate. it won't kill the country if we raise taxes a little bit on millionaires.
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it really won't," said bill kristol. so, mr. president, solutions are in our grasp. we only have to make the choice to pull together instead of pulling apart. the hands of the democratic caucus are reaching toward our republican friends -- our republican colleagues. i argue the republicans to join us to do the difficult and necessary work that's ahead. if there is a message to take away from this year's election, it is this -- americans are tired of politics and division. they are tired of obstruction and distraction. the american people -- democrats and republicans -- want cooperation and conciliation. i urge any of my republican colleagues who consider the same strategy of obstruction to turn away from the divisions of the past join in cooperation, compromise, and consensus. gridlock is not the solution. it is the problem. how this congress deals with the challenges ahead will be
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the test of our character both as individuals and as a body of politics -- the united states senate. some one said -- they spend their time looking forward to the past. as the british playwright john osborne said -- "they spend their time mostly looking forward to the past." we cannot look back, mr. president. we must show the american people we are equal to the challenges we now face. the challenges are here. we know the challenges. we see the challenges. we can feel the challenges. there are many, many reasons why as we wind down this 112th congress and embark upon the 113th that must succeed. the best illustration of our duty comes from the words of medal of honor recipient daniel inouye. senator inouye's son asked his
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dad -- why after people were designated as enemy aliens, as being put in internment camps, why did he and members of the famed 442nd regimental combat team fight heroically the way they did? asked why he fought, senator inouye told his son many years after the battle had ended, and lieutenant inouye's wounds had healed that he fought for the children. senator inouye said he fought for the children. so, i say to my colleagues -- democrats and republicans -- we must legislate for our children. they deserve it. we owe them the future. it is time for democrats and republicans to go forward now together. go forward now together. as gerald ford said and show the american people that we are equal to the challenges we face. the challenges are there, and
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let's face them and face them together. >> mr. president. >> the republican leader. >> i want to begin by welcoming all the new members who are here today -- republican and democrat. congratulations on your victories, and welcome to the senate. i assure you that it is not as terrible a job as some say it is. we welcome your ideas, your energy, and your enthusiasm, and we wish you every success in your time here. i also want to congratulate the president and the vice president on their hard-fought victory last week. i would like to say a brief word the thanks to our own nominees as well, governor romney and congressman ryan.
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they may not have won the race, but they earned our respect and admiration in the effort. they fought valiantly, valiantly for the cause of limited government, free enterprise, opportunity for all, and a stronger social safety net that is there when people need it most. they fought for the kind of constitutional conservatism some many americans believe in so very strongly. their lost says nothing to diminish the importance of these enduring principles or our commitment to keep fighting for them. so, we thank them, and we thank
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their families for making the sacrifices any presidential campaign demands, and i want to assure everyone the cause goes on. now, on the task at hand -- in politics, there is always a temptation among those who win office to think that they have a mandate to do what they will. it is the important to remember in this case the voters also reelected a republican- controlled house last week and a closely divided senate. in a government of three equal branches, that is hardly irrelevant. most people may focus on the white house, but fact is the government is organized no differently today than it was after the republican wave of 2010. look out across the heartland and you will see regions of the country wary of the president's vision for the future. the country is sharply divided about the right path forward. if the president wants to unite america, as he has always claimed to, if he truly realizes that he was elected to represent all of its citizens, not just the ones who voted to give him a second term last tuesday, then, he will seek common ground that he largely avoided so strenuously in his first term. that is his task. that is the duty that comes with being president.
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i hope that in this term he rises to the challenge. it starts by realizing that he is the only man in america who can sign a piece of legislation into law -- the only one of the 306 million americans. while voters have given him a second term, they have also given those of us in congress the power and the duty to ensure that he uses that power wisely. that is what we intend to do. the campaign is over. the time for slogans and pep rallies has passed. if the president is serious about solving current crises and avoiding future ones, he has to step up and to lead. so, let me be clear -- when it comes to the great economic challenges of the moment, saying that you want to have a
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balanced approach is not a plan. saying people need to pay their fair share is not a plan. the tedious repetition of poll- tested talking points is simply that. the longer the president uses them as a substitute for leadership the more difficult it will be to solve our problems. the time for the president to lead is now. that means offering a concrete plan that takes into account the fact that half of the congress opposes tax hikes. not because we are selfish, not because we are stubborn, but because we know it is the wrong thing to do. we know it will hurt the economy, and we know it will destroy jobs. this is not partisan politics. it is economics. as the president may say -- it is math.
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according to a recent independent, nonpartisan study, raising tax rates on top earners, as the president has proposed, would destroy over 700,000 jobs. it would slow the economy, meaning less revenue would come into the treasury. as a result, it would not do much to reduce the deficit, even if the democrats actually follow through and used it for that purpose. think about it. the amount of revenue for which they are prepared to push us over the fiscal cliff would not fund the government for a week. let me say that again -- the amount of revenue that they are prepared to push us over the cliff over would not fund the government for one week. so, why in the world would we want to do that? what is the point? to make people feel good about whacking someone else? that is not what we were sent here to do. that is certainly not what the people of kentucky sent me here to do. that is not how you set economic policy. because it makes you feel good?
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you set economic policy because you think it will lead to investment here in america, create jobs, and give more people an opportunity to lift up themselves. boosting middle class incomes now and ensuring security for the future. this is the kind of vision that speaker boehner laid out for the country last week. i cannot think why the president would not embrace it. some on the other side have said we should go over the cliff. just go off of the cliff. hope for the best.
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i do not think that is what the american people had in mind when they went to the polls last week. what they had in mind is that we put the contest of the past two years behind us and work it out. the best way forward and the way that will lead to jobs and growth, a smaller deficit, and fewer political fights is to keep everyone's tax rates right where they are for now. figure out a way to avoid the automatic defense cuts scheduled to hit at the end of the year without putting a penny less than we promised and committing to the comprehensive tax entitlement reforms that we all claim we want. a simpler tax code that lowers rates and clears out certain deductions and special interest loopholes would trigger economic growth, create jobs, and result
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in more revenue without raising anyone's rates. we know this because we have seen it before. it actually works. i do not think washington should get any of that extra revenue. i do not think we need it. as i have said before -- washington's problem is not that it taxes too little but that it spends too much. in a good faith effort to make progress on boosting the economy and governments long-term solvency, republicans, like me, have said for more than a year that we are open to new revenue in exchange for meaningful reform to the entitlement programs that are the primary drivers of our debt. so that we can reduce the deficit, protect these programs for today's seniors, and strengthen them for future generations. new revenue must be tied to genuine entitlement changes.
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let's strengthen them for the future and address our long term deficit problems. in other words, if we thought we could make progress in creating more middle-class jobs and address what is by far the single biggest obstacle to fiscal balance -- this is the basic outline of a plan. is our seriousness as a party. make no mistake, republicans are offering bipartisan solutions. now it is the president's return. his turn to demonstrate simple, similar seriousness. bring his party to the table and take the lead. we are ready to find common ground. ready to find common ground on revenue.
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not, as i said, because any of us think the government needs any more of it, but because democrats and the president on down have said they are willing to punish everyone if they do not get it. we are not about to let that happen. we are also not about to further weaken the economy by raising tax rates and hurting jobs. look, this should not be that difficult. history gives us two examples of presidents to solve big problems by finding common ground with the other side. ronald reagan did it with a democratic house after a resounding second term victory. as did bill clinton with the republican controlled house and republican controlled senate after a more resounding second term victory then president obama. both examples, both of them, illustrate the rare opportunity that divided government presents. president obama can follow suit or he can take the extremist view that both reagan and clinton rejected by founding
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his nose at the other side and insisting that if republicans are not willing to do things his way he will not do anything at all. if the president is serious, he will follow the lead of president reagan and clinton. if he is really serious, he will put the campaign rhetoric aside, propose a realistic resolution that can pass a republican controlled house and a divided senate, and work to get it done. if the president acts in this spirit, i have no doubt he will have the support of his own party and a willing partner in hours. the american people will
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criticize of relief knowing not only that we have avoided a crisis, but that washington can feel their interests. unless we act, americans will face a combination of defense cuts and automatic tax hikes that will plunge us into another recession and to undermine national defense. the looming crisis is made worse by the backdrop of a massive federal debt that will never be able to tackle as long as democrats refuse even the smallest of reforms to strengthen and protect the entitlement programs that are driving that bad. that is why republicans have remained strong on this point. any serious solution, any serious solution must include real, real spending cuts and meaningful entitlement reforms to strengthen and protect these programs for future generations. we got into this mess because we promised cuts that never materialized. we could not muster the will to match entitlements with changing demographics of our country. we're not going to get out of it until we are willing to do
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both and agree to do it together. republicans reached out, made offers beyond a third approach in an effort to attract bipartisan solutions. meanwhile, all we get from democrats are letters saying they will not even consider reforming the very programs that lie at the very heart of our fiscal imbalance. instead of showing faith and a willingness to solve the problem, we did the same talking points that we cannot cut our way to prosperity. that may poll well, but it is not a plan. it is a cliche that is meant to prevent a serious proposal from ever taking shape. so how do we get around this failure? it is simple. presidential leadership. let me repeat -- only one person
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in america out of 306 million americans who can sign something into law. even more importantly, deliver the members of his party to support a deal that he makes. we will arrive at a plan if the president presents one or we will not get anywhere at all. that is how we get out of a jam. that is what the moment requires. it is the president's move. so we can avoid these job killing tax hikes before they strike and replace the defense portion of the so-called sequester with cuts of equal side that both parties agree to during last summer's debt limit negotiations. we can do all of it in the weeks ahead with a promise to do even bigger things next year. that is exactly what we should do. this is one of those moments where the only thing standing between success and failure is
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presidential leadership. that is why we are calling on the president to seize the moment, seize the moment and do something he has not done before -- but which successful predecessors have so often done before. we call on him to lead, to take the initiative, proposed a plan that is actually designed to succeed. if he does i am confident he will find he has more republican friends over here than he thought. i am not asking the president to agree with us on the proper role of government or the dangers of increasing regulations. i am not asking him to adopt our principles. i am simply asking him to respect our principles and not insist that we compromise them. because we will not. we will be happy to work with him on a plan to avert the coming crisis and lay the groundwork for further successes down the road. let's just put the campaign behind us and get the job done. mr. president, i yield the
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floor. >> an annual meeting is being hosted in washington this week. treasury secretary to indict her talks about the so-called fiscal cliff. that is followed by outgoing senate chairmen kent conrad for his perspective for what the white house should do. tomorrow, president obama holds his first news conference since the 2012 election. live coverage at 1:30 p.m. eastern on c-span 2. "the wall street journal" ceo council is hosting its annual meeting this week in washington. meeting this week in washington.